The budgets of four companies yield the following? information: Requirements 1.

Question

The budgets of four companies yield the following? information:

Requirements

1.

Fill in the blanks for each company.

2.

Compute? breakeven, in sales? dollars, for each company. Which company has the lowest breakeven point in sales? dollars? What causes the low breakeven? point?

Requirement 1. Fill in the blanks for each company. ?(Round the contribution margin per unit and ratio calculations to two decimal? places.)

Q

Target sales. . . . . . . . . . . . . . . . . .

$800,000

Variable expenses. . . . . . . . . . . . .

232,000

Fixed expenses. . . . . . . . . . . . . . .

Operating income (loss). . . . . . . .

$213,000

Units sold. . . . . . . . . . . . . . . . . . . .

Contribution margin per unit. . . .

$6.40

Contribution margin ratio. . . . . . .

1.

Fill in the blanks for each company.

2.

Compute? breakeven, in sales? dollars, for each company. Which company has the lowest breakeven point in sales? dollars? What causes the low breakeven? point?

Company akever Target sales. Variable expenses Fixed expenses Operating income (loss) Units solod Contribution margin per unit 6.40 Contribution margin ratio $ 800,000 S 400,000 171,875 232,000 270,000 156,000 88,000 d ratio S$ 140,000 11,000 15.750 S10.00 S 40.00 $ 213,000 125,000 0.65

Explanation / Answer

Company S has lowest break even due to its lowest fixed costs.

Relation Q R S T a Target sales        8,00,000        4,00,000        1,71,875        9,00,000 b Variable exp        2,32,000        2,44,000           83,875        2,70,000 c= a-b Contribution        5,68,000        2,60,000           88,000        6,30,000 d Fixed costs        3,55,000        1,56,000           88,000        4,90,000 e= c-d Operating income        2,13,000        1,04,000                    -          1,40,000 f= c/g Units sold           88,750        1,25,000           11,000           15,750 g= c/f Contribution margin per unit 6.4 2.08 10 40 h= c/a Contribution margin ratio 0.71 0.65 0.512 0.7 i= d/h Break even dollars        5,00,000        2,40,000        1,71,875        7,00,000

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