MANAGEMENT ACCOUNTING 1

1. New Income Statement

a) Sales volume increase by 20% (In Dollars)
Total Per Unit
Sales (30.000 units) 630.000 21
Less Variable Expense 450.000 15
Contribution Margin 180.000 6
Less Fixed Expense 90.000
Net Operation 90.000

b) Selling price decreased $2 and volume sales increased by 30%

Total Per Unit
Sales (32.500 units) 617.500 19
Less Variable Expense 487.500 15
Contribution Margin 130.000 4
Less Fixed Expense 90.000
Net Operation 40.000

c) Selling price increased $2, fixed expenses increased $25.000

and sales volum decreased 10%
Total Per Unit
Sales (22.500 units) 517.500 23
Less Variable Expense 337.500 15
Contribution Margin 180.000 8
Less Fixed Expense 115.000
Net Operation 65.000

d) Selling price increased 15%, variable expenses increased by 80 cents per unit, and
sales volum decreased 15%
Total Per Unit
Sales (21.250 units) 513.187,5 24,15
Less Variable Expense 320.450 15,08
Contribution Margin 192.737,5 9,07
Less Fixed Expense 90.000
Net Operation 102.737,5

2. A. Making decision
Current Total Total if mountain Difference:
bike are stopped
MANAGEMENT ACCOUNTING 1

Net operating
income increase or
decrease
sales 600.000 480.000 - 120.000
Less production 240.000 174.000 66.000
cost and variable
exp
Contribution 360.000 306.000 - 54.000
margin
Less fixed exp:
Advertisment 60.000 48.000 12.000
Special equip. dep 46.000 46.000 0
Product line 70.000 50.000 20.000
manager salary
General fixed load 120.000 120.000 0
allocation
Total exp 296.000 224.000 32.000
Net operating 64.000 82.000 - 22.000
profit/loss

Because it shown that the company will be loss profit more than before if the mountain
bike are stopped, so the the decision is not to stop mountain bike production.

B. Reorganize the Data

Current Total Off Road Bike Cross Bike Mountain
Bike
Sales 600.000 180.000 300.000 120. 000
Less production 240.000 54.000 120.000 66. 000
cost and variable
exp
Contribution 360.000 126.000 180.000 54. 000
margin
Less fixed exp:
Advertisment 60.000 20.000 28.000 12. 000
Special equip. 46.000 12.000 18.000 16. 000
dep
Product line 70.000 24.000 26.000 20. 000
manager salary
Total exp 176.000 56.000 72.000 48. 000
MANAGEMENT ACCOUNTING 1

Net operating 184.000 70.000 108.000 6. 000

profit/loss

3. Number Three
a) Decision making of outsider offer
Calculation doing by company itself (In Dollars)
Per unit 30.000 unit per Year
Direct Material 28 840. 000
Direct Labor 20 600. 000
Overhead manufacture Variable 6 180. 000
Fixed, traceable manufacturing overhead 12 360. 000
Fixed manufacturing overhead 18 540. 000
Total Cost 84 2.520. 000

Calculation outsider offer

30.000 x $70 = $2.100. 000
So, in my opinion the company should be accept outsider offer

b) New product calculation

Per unit 30.000 unit per
Year
Direct Material 28 840. 000
Direct Labor 20 600. 000
Overhead manufacture Variable 6 180. 000
Fixed, traceable manufacturing 12 360. 000
overhead
Fixed manufacturing overhead 18 540. 000
Total Cost 84 2.520. 000

New Machine
Margin contribuiton 300.000
Outsider offer 2.100.000
Total Cost 2.400.000

4. Number four
(In Dollars)
MANAGEMENT ACCOUNTING 1

Assume the company production

Per Unit Total
Direct Material 3,10
Direct Labor 2,70
Supervision 1,50 60.000
Depreciation 1,00 40.000
Overhead Manufacture Variable 0,60
Rent 0,30 12.000
Cost Production Total 9,20 112.000

Offer from Outside 8,40

Rent 80.000

Total Cost 80,000