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ID: 2340959 • Letter: I
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The following CVP income stat events are aviliable for Blane Company and Noir Company. 495000 $475,000 47,500 247,500 222,750 $24,750 Contritution margin Fbed costs 158000 524.750 kulte Centrutionmargin retio.(Rourd onswers to 2decinlpfces,es 0.32) Contribution Margin Ratio Blenc Compay Noir Company cTetbook and Media Compute the break-evenpoint in dolars r eacompay Rud ewYs to O cimalakese 5,125 Blnc Compan cTetbook and Mcdia Dlas Compay Tobook and Media Degree of Operatine Leverace lanccompany Nair Company cTcabook and Mcdia Assam in that sales mwsue Increase; ny1%, prrpare aap inesnesramment ter raen compar y (hmym n eamounts using Banc Teabook and Media Assuming that sales revenuencreases by 20%, prepare a cvpincone statement tor eacnconparys 4trtey negative amounts using eithr a negative sign peceding the mmberes 45 arparmmtheseses 5)) Blanc Noir CExplanation / Answer
Contribution margin ratio = Contribution margin/Sales Blanc Company: $198000/$495000 = 0.40 Noir Company: $247500/$495000 = 0.50 Break-even point in dollars = Fixed costs/Contribution margin ratio Blanc Company: $173250/0.40 = $433125 Noir Company: $222750/0.50 = $445500 Margin of safety ratio = (Actual sales - Breakeven sales)/Actual sales Blanc Company: ($495000 - $433125)/$495000 = $61875/$495000 = 0.125 Noir Company: ($495000 - $445500)/$495000 = $49500/$495000 = 0.100 Degree of operating leverage = Contribution margin/Net income Blanc Company: $198000/$24750 = 8.00 Noir Company: $247500/$24750 = 10.00 Blanc Company Noir Company Sales 594000 594000 Variable costs 356400 297000 Contribution margin 237600 297000 Fixed costs -173250 -222750 Net income 64350 74250 Blanc Company Noir Company Sales 396000 396000 Variable costs 237600 198000 Contribution margin 158400 198000 Fixed costs -173250 -222750 Net income -14850 -24750
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