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Brilliant_brown [7]
2 years ago
15

Chester has negotiated a new labor contract for the next round that will affect the cost for their product City. Labor costs wil

l go from $2.89 to $3.39 per unit. Assume all period and variable costs as reported on Chester's Income Statement remain the same. If Chester were to pass on half the new labor costs to their customers, how many units of product City would need to be sold next round to break even on the product
Business
1 answer:
Dmitriy789 [7]2 years ago
4 0

Answer:

Find attached complete question:

Option A 1452 units

Explanation:

The increase in labor cost=$3.39-$2.89=$0.50

Half of the increase would reflect as increase in price i.e$0.25

Current price is $16

new price is $16+$0.25=$16.25

contribution margin =selling price -variable cost

currently units sold=$30,875/$16= 1,930

Current contribution per unit=$11,401/1930=$5.91

new contribution per unit would reduce by $0.25 i.e $5.91-$0.25=$5.66

breakeven in units=period cost/contribution margin per unit

period cost is $8346

breakeven units=$8346/$5.66=1475 units

The closest option is A 1452 units,the difference could be due to rounding error

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A broker associate who had a valid salesperson license five years ago

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On October 29, 2017, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The ra
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Answer:

a. Nov 11, 2017

Dr Cash $4,900

Cr sales $4,900

Nov 30, 2017

Dr Warranty expense $294

Cr Estimated warranty Liabilities $294

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Dr Estimated warranty Liabilities $196

Cr Cash $196

Dec 16, 2017

Dr Cash $14,700

Cr sales $14,700

Dec 29, 2017

Dr Estimated warranty Liabilities $392

Cr Cash $392

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Dr Warranty expense $882

Cr Estimated warranty Liabilities $882

b. Jan 5,2018

Dr Cash $9,800

Cr Sales$9,800

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Dr Estimated warranty Liabilities $462

Cr Cash $462

Dec 31,2018

Dr Warranty expense $588

Cr Cash $588

Explanation:

a. Preparation of the journal entries to record above transactions and adjustments for 2017

Nov 11, 2017

Dr Cash $4,900

Cr sales $4,900

(Being to record razors sold for cash)

Nov 30, 2017

Dr Warranty expense $294

Cr Estimated warranty Liabilities $294

($4900*6%)

(Being to record warranty expense)

Dec 9, 2017

Dr Estimated warranty Liabilities $196

Cr Cash $196

(14 razors*14)

(Being to replaced 14 razors)

Dec 16, 2017

Dr Cash $14,700

Cr sales $14,700

(Being razors sold for cash)

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Dr Estimated warranty Liabilities $392

Cr Cash $392

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(Being to replaced 28 razors)

Dec 31, 2017

Dr Warranty expense $882

Cr Estimated warranty Liabilities $882

($14,700*6%)

(Being to record warranty expense)

b. Preparation of the journal entries to record above transactions and adjustments for 2018

Jan 5,2018

Dr Cash $9,800

Cr Sales$9,800

(Being to record razors sold for cash)

Jan 17,2018

Dr Estimated warranty Liabilities $462

Cr Cash $462

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(Being to replaced 33 razors)

Dec 31,2018

Dr Warranty expense $588

Cr Cash

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(Being to record warranty expense)

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