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Project 5
Instructions: Fill in the blank cells in the spreadsheet and answer the questions below.
Selling Estimated Total Fixed Variable Break-
Price Deck Fixed Costs Costs Even
Per Deck Sales Costs Per Deck Per Deck Point
\$10.95 13,000 85,000 \$ 6.54 \$ 3.00 \$ 10,692
\$11.45 12,000 85,000 \$ 7.08 \$ 3.00 \$ 10,059
\$11.95 11,000 85,000 \$ 7.73 \$ 3.00 \$ 9,497
\$12.45 10,000 85,000 \$ 8.50 \$ 3.00 \$ 8,995
\$12.95 8,000 85,000 \$ 10.63 \$ 3.00 \$ 8,543
\$13.45 7,000 85,000 \$ 12.14 \$ 3.00 \$ 8,134
1. What are the total costs per deck to produce 13,000 decks that sell for \$10.95 each?
2. What are the total costs per deck to produce 10,000 decks that sell for \$12.45 each?
3. Which price points are most likely to create a loss for PlayGroe Inc.? Why?
Price points:
Reason:
Estimated deck sales are less than the break-even point and total fixed and variable
costs per deck are greater than the selling price per deck.
4. Why are the fixed costs to produce \$13.45 decks so much greater than the fixed costs to make
\$10.95 decks?
Estimated deck sales are less than the break-even point and total fixed and variable
Estimated deck sales are less than the break-even point and total fixed and variable
PLAYGROE, INC. Manufacture of Playing Cards
Page 2
Project 5
Instructions: John and Joyce Saunders are comparing depreciation methods for their business van. Fill in the blank cells in the
1 70,000 \$ 10,000 \$ 12,000 \$ 12,000 \$ 58,000 \$ 1 70,000 \$ 20.00% 14,000.00 \$ 14,000.00 \$ 56,000.00 \$
2 70,000 \$ 10,000 \$ 12,000 \$ 24,000 \$ 46,000 \$ 2 70,000 \$ 32.00% 22,400.00 \$ 36,400.00 \$ 33,600.00 \$
3 70,000 \$ 10,000 \$ 12,000 \$ 36,000 \$ 34,000 \$ 3 70,000 \$ 19.20% 13,440.00 \$ 49,840.00 \$ 20,160.00 \$
4 70,000 \$ 10,000 \$ 12,000 \$ 48,000 \$ 22,000 \$ 4 70,000 \$ 11.52% 8,064.00 \$ 57,904.00 \$ 12,096.00 \$
5 70,000 \$ 10,000 \$ 12,000 \$ 60,000 \$ 10,000 \$ 5 70,000 \$ 11.52% 8,064.00 \$ 65,968.00 \$ 4,032.00 \$
6 70,000 \$ 5.76% 4,032.00 \$ 70,000.00 \$ - \$
100.00% 70,000.00 \$
1. Which depreciation method shows greater book value for the van at the end of each year?
2. During which year of MACRS depreciation was annual depreciation the greatest?
3. During which year of MACRS depreciation was annual depreciation the least?
4. Why does not MACRS show salvage value for the van?
5. Which style of depreciation would you use? Why?
d
Depreciation Book Value
STRAIGHT-LINE DEPRECIATION OVER 5 YEARS
End of
Year
Original
Cost
Salvage
Value Depreciation
MACRS DEPRECIATION
Year
Original
Cost
Fixed
Percent
Annual
Depreciation
Accumulated
Depreciation Book Value