Homework: Essentials of Managerial Accounting Module
Part A
Instructions
The Lakeland Symphony would like to perform for a neighboring city. Fixed costs for the performance total $5,250. Tickets will sell for $15.75 per person, and an outside organization responsible for processing ticket orders charges the symphony a fee of $2.10 per ticket. The Lakeland Symphony expects to sell 500 tickets.
a. How many tickets must the Lakeland Symphony sell to break even?
b. How many tickets must the symphony sell to earn a profit of $7,350?
c. How much must the Lakeland Symphony have in sales dollars to break even?
d. How much must the Lakeland Symphony have in sales dollars to earn a profit of $7,350?
e. What is the symphony's margin of safety in units and in sales dollars?
Part B
MacFarlane Printer Machines (MPM) builds three computer printer models: Inkjet, Laser, and Color Laser. Information for these three products is as follows:
InkjetLaserColor LaserTotalSelling price per unit$255$420$1,680 Variable cost per unit$105$158$840 Expected unit sales (annual)12,6006,3002,10021,000Sales mix60%30%10%100%
Total annual fixed costs are $5,250,000. Assume that the sales mix remains the same at all levels of sales.
a. How many printers in total must be sold to break even?
b. How many units of each printer must be sold to break even?
c. How many printers in total must be sold to earn an annual profit of $1,000,000?
d. How many units of each printer must be sold to earn an annual profit of $1,000,000?
Part C
Use the information from Homework 2 to perform a sensitivity analysis using Excel. Assume that each scenario that follows is independent of the others. Unless stated otherwise, the variables are the same as in the base case.
a. How will total profit change if the Laser sales price increases by 10%?
b. How will total profit change if the Inkjet sales volume decreases by 4,000 units and the sales volume of other products remains the same?
c. How will total profit change if fixed costs decrease by 20%?
Part D
In a one-page "journal", consider cost structures and sensitivity analysis. What are the characteristics of a company with low operating leverage, and how do these characteristics differ from those of a company that has high operating leverage?
Format your homework according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.