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  • 1.  Treasury Shares

    Posted 10-18-2021 11:56 PM

    hello, are treasury shares deducted from the weight ave outstanding shares when calculating EPS?


    thank you
    Alyssa



    ------------------------------
    Alyssa Marielle Enriquez
    Accountant
    Castro Valley CA
    United States
    ------------------------------


  • 2.  RE: Treasury Shares

    Posted 10-19-2021 04:36 AM
    Hi Alyssa,  treasury stock is not part of outstanding shares, when calculating eps we take the number of outstanding shares only, no need to subtract treasury as it is not part of it. Recall the relation between outstanding shares and issued shares:
    issued shares= outstanding shares+ treasury stock.

    I hope this helps

    ------------------------------
    Josue Rosario Ortega
    Analyst
    Mississauga ON
    Canada
    ------------------------------

    Original Message


  • 3.  RE: Treasury Shares

    Posted 10-19-2021 05:56 AM
      Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large industrial mixing machines used in flour, rubber, petroleum, and chemical manufacturing. Precisionmix sells for $900 per unit. The following variable costs are incurred to produce each Precisionmix device: Direct labor $180 Direct materials 240 Factory overhead 105 Total variable production costs 525 Marketing costs 75 Total variable costs $600 Madengrad's income tax rate is 40%, and annual fixed costs are $6,600,000. Except for an operating loss incurred in the year of incorporation, the firm has been profitable over the last 5 years. [1] (Refers to Fact 

    Pattern #1) Assume a 10% increase in annual fixed costs, a 20% unit cost increase for direct labor, and a reduction in unit material costs of 25%, with no change in selling price. Madengrad Company's breakeven point would increase (decrease) (rounded to the nearest whole unit) 
    by
     A. 3,960 units
    . B. 407 units.
     C. 1,604 units.
     D. (1,620) units.  


    please answer to this question....



    Original Message


  • 4.  RE: Treasury Shares

    Posted 10-19-2021 08:23 AM

    Hello Dears,

     

    This question is comparing between the BEP in units with current situation and after the changes in the costs.

    BEP = FIXED COSTS / C. MARGIN per UNIT

    BEP 1 = 6,600,000 / (900-600) = 22,000 UNITS                   (1)

    BEP 2 = (6,600,000*1.1) / ( 900-576) = 22,407 UNITS        (2)

    BEP 2 – BEP 1 = 22,407-22,000 = 407 UNITS INCRESED.

    Notes:

    New fixed costs = 6,600,000 +10% = 7,260,000

    New variable costs = 576 as follow:-

    1 - Direct labor = 180+20% = 216

    2 - Direct Materials = 240-25% = 180

    3 - Factory overhead is the same = 105

    4 - Marketing costs is the same = 75

     

     

     

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    Original Message