P22-1A
Stan Loy owns the Vista Barber Shop.  He employs 5 barbers and pays each a base rate of $1000 per month.  One of the barbers serves as a manager and receives an extra $500 per month.  In addition to the base rate, each barber also receives a commission of $5.50 per haircut.

Other costs: Advertising $200 per month, Rent 900 per month, Barber supplies .30 per haircut, Utilities 175 per month plus .20 per haircut, Magazines 25 per month.

Stan currently charges $10 per haircut.

a) Determine the variable cost per haircut and the total monthly fixes costs
b)Compute the break even point in units and dollars
c) Prepara a CVP graph assuming a maximum of $1,800 haircuts in a month.  Use increments of 300 haircuts on the horizontal axis and $3,000 on the vertical axis.
d) Determine net income, assuming 1,900 haircuts are given in a month.

P23-3A
Remington INdustries had sales in 2012 of $6,400,000 and gross profit of $1,100,000.  Management is considering two alternative budget plans to increase its gross profit in 2013.

Plan A would increase the selling price per unit from $8.00 to $8.40.  Sales volume would decrease by 5% from its 2012 level.  Plan B would decrease the selling price per unit by .50.  The marketing dept expects that the sales volume would increase by 150,000 units.

At the end of 2012, Remington has 40,000 units of inventory on hand.  Plan A is accepted, the 2013 ending inventory should be equal to 5% of the 2013 sales.  If Plan B is accepted, the ending inventory should be equal to 50,000 units.  Each unit produced will cost 1.80 in direct labor, 2.00 in direct materials, and 1.20 in variable overhead.  The fixed overhead for 2013 should be $1,895,000.

a) Prepare a sales budget for 2013 under each plan
b) Prepare production budget for 2013 under ea plan
c) Compute the production cost per unit under ea plan.  Why is the cost per unit different for ea of the two plans?  Round to two decimals
d) Which plan should be accepted?  (compute the gross profit under each plan)

P24-5A
Namath Manufacturing Co manufactures a variety tools and industrial equipment.  The company operates through 3 divisions.  Ea divisions is an investment center.  Operating data for the Home Division for the year ended Dec 31, 2012, and relevant budget data are as follows:

Sales $1,500,00 (actual) $100,000 favorable (comparison with budget CWB)
Variable cost of goods sold $700,000 (actual)60,000 unfavorable (CWB)
Variable selling & admin expenses 125,000(actual) 25,000 unfavorable (CWB)
COntrollable fixed cost of goods sold 170,000 (actual) ON TARGET - CWB
Controllable fixed selling & admin expenses 80,000 (actual) ON TARGET (CWB)

Average operating assets for the year for the Home Division were $2,500,000 which was also the budgeted amount.

a) Prepare a responsibility report in thousands of dollars for the HOme Division.
b) Evaluate manager's performance.  Which items will likely be investigated by top management?
c) Compute the expected ROI in 2013 for the Home Division, assuming the following independent changes to actual data.
1) Variable cost of goods sold is decreased by 6%
2) Average operating assts are decreased by 10%
3) Sales are increased by $200,000 and this increase is expected to increase contribution margin by $90,000.





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