Cash Behavior Assignment Problems.

Cash Behavior Assignment Problems.

PROBLEM 2–19 Contribution Format versus Traditional Income Statement. Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $3,125 each. The selling and administrative costs that the company incurs in a typical month are presented below: Cash Behavior Assignment Problems.



Costs                                              Cost Formula


Advertising………………………………..$700 per month

Sales salaries and commissions… $950 per month, plus 8% of sales                                                   Delivery of pianos to customers…  $30 per piano sold

Utilities……………………………………..$350 per month

Depreciation of sales facilities…….$800 per month


Executive salaries……………………….$2,500 per month

Insurance…………………………………..$400 per month

Clerical……………………………………..$1,000 per month, plus $20 per        piano sold

Depreciation of office equipment …..$300 per month


During August, Marwick’s Pianos, Inc., sold and delivered 40 pianos.


  1. Prepare an income statement for Marwick’s Pianos, Inc., for August. Use the traditional format, with costs organized by function.
  2. Redo requirement 1 above, this time using the contribution format, with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin.
  3. Refer to the income statement you prepared in requirement 2 above. Why might it be misleading to show the fixed costs on a per unit basis? Cash Behavior Assignment Problems.


PROBLEM 2–20 High-Low Method; Predicting Cost.

Nova Company’s total overhead cost at various levels of activity are presented below:

Month                                   Machine-Hours                              Total Overhead April…………..               70,000                                                $198,000

May…………..                      60,000                                                $174,000

June ………….                      80,000                                                $222,000

July …………..                      90,000                                                $246,000


Assume that the total overhead cost above consists of utilities, supervisory salaries, and main-tenance. The breakdown of these costs at the 60,000 machine-hour level of activity is: Cash Behavior Assignment Problems.


Utilities□(variable) …………………..                                            $ 48,000                      Supervisory salaries (fixed)………                                        21,000

Maintenance (mixed) ……………..                                               105,000


Total overhead cost ……………….                                              $174,000


Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.


  1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
  2. Using the high-low method, estimate a cost formula for maintenance.
  3. Express the company’s total overhead cost in the linear equation form Y = a + bX.
  4. What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours? Cash Behavior Assignment Problems.


PROBLEM 3–25 Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis.

Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3 per unit. Enough capacity exists in the company’s plant to produce 16,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $1.25, and fixed expenses associated with the toy would total $35,000 per month. Cash Behavior Assignment Problems.

The company’s Marketing Department predicts that demand for the new toy will exceed the 16,000 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $1,000 per month. Variable expenses in the rented facility would total $1.40 per unit, due to somewhat less efficient operations than in the main plant. Cash Behavior Assignment Problems.




  1. Compute the monthly break-even point for the new toy in unit sales and in dollar sales.
  2. How many units must be sold each month to make a monthly profit of $12,000?
  3. If the sales manager receives a bonus of 10 cents for each unit sold in excess of the break-even point, how many units must be sold each month to earn a return of 25% on the monthly investment in fixed expenses? Cash Behavior Assignment Problems.


Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
hiw 01
Pro service tips
How to get the most out of your experience with Nursing Papers Writer
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat