20th of December, 2016

Accounting for Managers

Chapter 2 Management Accounting
Instructor: Dr. M. Nagui Darwish

Nashwa Saad
Human Resources Manager
Ace Global Depository
Mob: +20 (109) 35 58 064
Chapter 02 Introduction to Management Accounting

2-29 - Basic Review Exercise:

The Answer:
Variable Contribution Fixed Net Income
Cases Sales
Expenses Margin Expenses (Loss)
1 $960,000 $533,000 $427,000 $310,000 $117,000
2 550,000 250,000 300,000 254,000 46,000
3 1,020,000 500,000 520,000 200,000 320,000

2-32 - Basic Review Exercise:

The Answer:
Selling Variable Total
Total Units Total Fixed Net Income
Cases Price Per Cost Per Contribution
Sold Costs (Loss)
Unit Unit Margin
1 $26 $20 125,000 $750,000 $675,000 $75,000
2 10 6 100,000 400,000 320,000 80,000
3 21 18 21,000 63,000 49,000 14,000
4 30 20 60,000 600,000 588,000 12,000
5 14 12 86,000 172,000 125,000 47,000

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Chapter 02 Introduction to Management Accounting

2-43 Variable Cost to Break Even:

The Answer:
1- The largest variable cost per carton that the company can pay and still achieve a profit $1 million is :
$23
2- If the variable cost is $25 per carton , then the company shall expect :
$600,000 Loss

2-55 Changing Fixed Costs to Variable Costs:

The Answer:
1. Number of Days is : 32.5 Days about 33 Days
2. Number of Days is : 5.8 Days about 6 Days
3. Profit under traditional strategy equals $35, Profit under the new strategy $53
4. Profit under traditional strategy equals $-53, Profit under the new strategy $0.2
5. The new arrangements reduces the risks ultimately, by reducing rental days required to break even
from 33 days to only 6 days by %81.8

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Chapter 02 Introduction to Management Accounting

2-56 CVP and Financial Statements:

The Answer:

Net Sales $74,303.1

Costs of Products Sold 40,768
Selling, General and Administrative Expenses 23,357.7
Operating Income 10,159.4

Percentage decrease in operating income equals %-35.77

The percentage decrease in income differs from the percentage decrease in sales, because the cost
of products sold are still the same

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Chapter 02 Introduction to Management Accounting

2-61 Gross Margin and Contribution Margin:

The Answer:
The total contribution margin equals $3,287
The total contribution margin percentage %54.58

Thank You
Nashwa Saad
20 / 12 / 2016

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