Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
P16:29 Contribution Income Statement, Cost-Volume-Profit Graph, and Taxes Jail and Sail: Alcatraz Tour and Cruise provides sunset sightseeing tours of Alcatraz and the San Francisco Bay
P16:29 Contribution Income Statement, Cost-Volume-Profit Graph, and Taxes Jail and Sail: Alcatraz Tour and Cruise provides sunset sightseeing tours of Alcatraz and the San Francisco Bay. Tickets cost $140 each. Assume 2,200 customers were served in July
Cambridge Business Pakistan Hule 16 Cost-Volume-Profit Analysis and Planning Fixed Costs per Month Variable Costs per Customer Admission fees. Overhead .... Hors d'oeuvres. Selling and administrative. Total .... $60 Operations 25 Selling and administration 15 2 $102 Total 1295 525 Jail and Sail is subject to an income tax rate of 21%. Required a. Prepare a contribution income statement for July. b. Determine Jail and Sail's monthly break-even point in units. c. Determine Jail and Sail's margin of safety in units for July. d. Determine the unit sales required for a monthly after-tax profit of $20,000. e. Prepare a cost-volume-profit graph. Label the horizontal axis in units with a maximum value of 4,000. Label the vertical in dollars with a maximum value of $600,000. Draw a vertical line on the graph for the current (2,200) unit level and label total variable costs, total fixed costs, and med before-tax profits at 2.200 units.
Expert Solution
a)
| Variable Costing Income Statement for July | ||
| Note | Amount $ | |
| Tickets Sold | 2200 | |
| Sales (Sales Price* Tickets Sold) (WN-1) | A | 308,000 |
| Cost of Goods sold (VC per ticket*Tickets Sold) | B | 220,000 |
| Gross Contribution | C=A-B | 88,000 |
| Less: Variable Selling and Administration Expenses | D | 4,400 |
| Contribution Margin | E=C-D | 83,600 |
| Less: Fixed Cost | ||
| Fixed Overheads -operations | F | 50,000 |
| Selling and Administration Expenses | G | 12,500 |
| Operating Income Before Interest and Taxes (EBIT) | H=E-F-G | 21,100 |
| WN 1 - Calculating Variable Cost per Ticket (VC per Ticket) | |
| Amount $ | |
| Admission Fees | 60.00 |
| Overhead | 25.00 |
| Hors d'oeuvers | 15.00 |
| Cost per Unit | 100.00 |
2) Assumption : Selling and Administration Expenses (Variable+Fixed) are not directly related to production. Hence not consider for calculation
| Break-even Point (Units) = Fixed Costs / (Revenue Per Unit – Variable Cost Per Unit) |
| Break-even Point (Units) = $ 50,000 / $ (140-100) = 1250 units |
3)
| Break-even (Sales) = BEP Units* Sales Price per units= 1250 units *140 = $175,000 |
| Margin of Safety (Sales)= Actual sales – Break-even sales = $308,000 -$175,000 = $133,000 |
| Margin of Safety (Units)= Margin of Safety (Sales)/ Selling Price per unit = $133,000/140 = 950 Units |
2) Assumption : Selling and Administration Expenses (Variable+Fixed) are directly related to production. Hence consider for calculation
Break-even Point (Units) = $ 62,500 / $ (140-102) = 1644.74 units
3) Margin of Safety (Units)= Total Units - BEP Units = 2200 -1644.74 = 555.26 Units
4)
| Note | Amount $ | |
| Profit After Tax | A | 20,000.00 |
| Tax @ 21% of EBIT (20000*100/79) | B | 5,316.45 |
| Operating Income Before Interest and Taxes (EBIT) | C=A+B | 25,316.45 |
| Fixed Cost | ||
| Fixed Overheads -operations | D | 50,000.00 |
| Selling and Administration Expenses | E | 12,500.00 |
| Contribution Margin | F=C+D+E | 87,816.45 |
| Selling cost per ticket | G | 140.00 |
| Total varibale cost per ticket | H | 102.00 |
| Contribution per ticket | I= G-H | 38.00 |
| No of Units (Sales ) required | F/I | 2,310.96 |
E) Graph : Image attached
Please use this google drive link to download the answer file.
https://drive.google.com/file/d/1eBH8ei_JL1lMbcxiVJU2Cz9a6sd476iU/view?usp=sharing
Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process.
https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
