Vin Diesel owns the Fredonia Barber Shop. He employs four barbers and pays each a base rate of $1,250 per month. One of the barbers serves as the manager and receives an extra$500 per month. In addition to the base rate, each barber also receives a commission of $4.50 per haircut.

Other costs are as follows.

Costs
Advertising	$200 per month
Rent	$1,100 per month
Barber supplies	$0.30 per haircut
Utilities	$175 per month plus$0.20 per haircut
Magazines	$25 per month

Vin currently charges$10 per haircut. Instructions (d) Determine net income, assuming 1,600 haircuts are given in a month.

Vin Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,470 per month. One of the barbers serves as the manager and receives an extra$530 per month. In addition to the base rate, each barber also receives a commission of $5.64 per haircut. Other costs are as follows.

Vin currently charges$11.19 per haircut.

1. Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g., 2.25.)
2. Compute the break-even point in units and dollars. (Round answers to 0 decimal places, e.g. 1,250.)
3. Determine net income, assuming 2,380 haircuts are given in a month.

Answer the following question.

Isabelle owns a small hair salon. She discovered a positive correlation between the number of clients she has and the amount of money she makes each week. Does this situation illustrate causation? If so, what should she do to make more money?

The condensed income statement for the Peri and Paul partnership for 2017 is as follows.

$$\begin{array}{c} \textbf{PERI AND PAUL COMPANY}\\ \textbf{Income Statement}\\ \textbf{For the Year Ended December 31, 2017}\\ \end{array}$$

$$\begin{array}{lc} \text{Sales (240,000 units)}&&\$1,200,000\\ \text{Cost of goods sold}&&\underline{800,000}\\ \text{Gross profit}&&400,000\\ \text{Operating expenses}\\ \text{Selling}&\$280,000\\ \text{Administrative}&\underline{150,000}&\underline{430,000}\\ \text{Net loss}&&\underline{\underline{\$(30,000)}} \end{array}$$

A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. Instructions (Round to nearest unit, dollar, and percentage, where necessary. Use the CVP income statement format in computing profits.) (a) Compute the break-even point in total sales dollars and in units for 2017.

The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows.

Instructions Determine the inn’s break-even point in (a) number of rented rooms per month

The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows.

Instructions Determine the inn’s break-even point in (b) dollars.

Huang Company’s break-even sales are $500,000. Assuming fixed costs are$180,000, what sales volume is needed to achieve a target net income of $90,000?

Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

Instructions (a) Define the terms variable costs, fi xed costs, and mixed costs.

Scott Winter asks your help in understanding the term “activity index.” Explain the meaning and importance of this term for Scott.

Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows; Average cost per unit:

$$\begin{aligned} & \text{Direct Materials} \$ 7.00 \\ & \text{Direct labor} \$ 4.00 \\ & \text{Variable manufacturing overhead} \$ 1.50 \\ & \text{Fixed manufacturing overhead} \$ 5.00 \\ & \text{Fixed selling expense} \$ 3.50 \\ & \text{Fixed administrative expense} \$ 2.50 \\ & \text{Sales commissions} \$ 1.00 \\ & \text{Variable administrative expense} \$ 0.50 \end{aligned}$$

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 20,000 units?

b. What is the total indirect manufacturing cost incurred to make 20,000 units?

2. Assume the cost object is the Manufacturing Department and that its total output is 20,000 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department? 3. Assume the cost object is the company's various sales representatives. Furthermore, assume that the company spent $$50,000 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives' compensation. a. When the company sells 20,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? b. When the company sells 20,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives? 4. Are Kubin's administrative expenses always going to be treated as indirect costs in its internal management reports??

Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:

Direct materials                            $7.00
Direct labor$4.00
Variable manufacturing overhead             $1.50
Fixed manufacturing overhead$5.00
Fixed selling expense                       $3.50
Fixed administrative expense$2.50
Sales commissions                           $1.00
Variable administrative expense$0.50

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units?
2. For financial accounting purposes, what is the total amount of period costs incurred to sell 20,000 units?
3. For financial accounting purposes, what is the total amount of product costs incurred to make 22,000 units?
4. For financial accounting purposes, what is the total amount of period costs incurred to sell 18,000 units?

The Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company’s profi ts might be increased in the coming year. This problem asks you to use cost-volume-profi t concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them

For Lodes Company, the relevant range of production is 40–80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fi xed cost is$6,000. Diagram the behavior of each cost within the relevant range assuming the behavior is linear.

The Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company’s profi ts might be increased in the coming year. This problem asks you to use cost-volume-profi t concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them