PROBLEM 3-26

TEMPLATE

(Line-Item Budget)

SEE RAW DATA TAB BELOW

Eger Township
Budget
For Year Ending March 31, 2013

Depreciation Exp. Total 438,827.00

Fringe Benefits Total 462,934.82
Gas & Electric Total 71,832.68
Interest Total 42,410.00
Rent Total 128,349.00
Salaries Total 2,204,451.50
Supplies Total 187,235.82
Telephone Total 32,255.52
Total Total $617.00
Grand Total $3,568,913.34
Problem 4-33

Fixed Cost $ 48,000.00

Price $ 3,600.00
Variable Cost $1,600

Break-even

BEQ=FC/(P-VC) 24

Answer:
The exhibit need to be at the center for 24 days in order to break even.
Problem 4-38

Quantity 30
Price $ 20,000.00
Variable Cost $ 1,000.00
Fixed cost ?

BEQ=FC/(P-VC)

30=FC/(20000-1000)

FC $ 570,000.00

Answer:
MFAM can afford to spend $570,000 on fixed costs and still break even.
eak even.
Problem 4-44

Before:
Fixed Cost $ 25,000.00
Price $ 75.00
Variable Cost $ 35.00

BEQ $ 625.00

Answer:

The break-even quantity will increase by $ 375.00

After:
Fixed Cost $ 25,000.00
Price $ 65.00
Variable Cost $ 40.00

BEQ $ 1,000.00
PROBLEM 4-51

TEMPLATE

(Break-even Analysis - Multiple Products)

Price VC =

Pool $70 $3
Tennis $50 $3
Golf $30 $3
Weighted Average Contribution Margin

or
Price Mix Weighted

Pool
Tennis
Golf
Weighted $0.00
Average
Price

Variable Mix Weighted

Cost
Pool
Tennis
Golf
Weighted Average $0.00
Variable Cost
FC
Q = ------------- =
P - VC

Answer:
1) 5,000 people must buy passes for the town to break even.
2) Number of passes would be sold for pool at that volume:
 CM * Mix = Weighted

$67 40% $26.80

$47 35% $16.45
$27 25% $6.75
$50.00

$250,000
------------- = 5,000
$50.00

2000
PROBLEM 5-20

SOLUTION

(TVM - PRESENT VALUE OF ANNUITY)

INPUT DATA
PMT = ($430)
Years = 3
Nper = 36
Annual rate = 9%
Rate = 75.00%

CALCULATION

Excel Formula: =PV(rate,nper,pmt,fv,type)

Cell Reference Formula Solution: =PV(C13,C11,C9)
$573.33
EXERCISE 5-21

SOLUTION

(Net Present Cost)

INPUT DATA

High Security
Initial Outflow
rate
nper
PMT
NPC

Tight Security
Initial Outflow
rate
nper
PMT
NPC

CALCULATION

High Security

Cell Reference Formula Solution:

Tight Security

Cell Reference Formula Solution:

Answer:
Tight security has the lower net present cost by
 ($40,000)
1%
36
($3,000)

($85,000)
1%
36
($1,200)

=PV(B10,B11,B12)-B9 $130,322.52

=PV(B17,B18,B19)-B16 $121,129.01

$9,193.51
PROBLEM 5-31

SOLUTION

(IRR)

INPUT DATA
PV ($5,000)
Year 1 $800
Year 2 $800
Year 3 $800
Year 4 $800
Year 5 $800
Year 6 $800
Year 7 $800
PMT
Nper
IRR 2.92%

CALCULATION

Excel Formula: =Rate(nper,pmt,pv,fv,type,guess)

Cell Reference Formula Solution: =RATE(B17,B16,B8)

OR

Excel Formula: =IRR(values,guess)

Cell Reference Formula Solution: =IRR(B8:B15)
Err:502

2.92%