Trevino Company makes and sells products with variable costs of $24 each. Trevin
ID: 2396745 • Letter: T
Question
Trevino Company makes and sells products with variable costs of $24 each. Trevino incurs annual fixed costs of $315,000. The current sales price is $87 Problem 3-23A Part d d. If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format Complete this question by entering your answers in the tabs below. Required D1Required D2 If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars Sales volume in units Sales volume in dollars Required D2>Explanation / Answer
Solution d1:
New contribution margin per unit = $80 - $24 = $56 per unit
Total fixed costs = $315,000
Desired profit = $252,000
Desired contribution margin = $315,000 + $252,000 = $567,000
Desired sales volume in units = Desired contribution margin / contribution margin per unit = $567,000 / $56 = 10125 units
Desired sales in dollar = 10125 * $80 = $810,000
Solution d2:
Solution e1:
Contribution margin per unit = $87 - $24 = $63
Desired profit = $252,000
Fixed cost = $280,000
Desired contribution margin = $280,000 + $252,000 = $532,000
Desired sales volume in units = Desired contribution margin / contribution margin per unit = $532,000 / $63 = 8444 units
Desired sales in dollar = 8444 * $87 = $734,628
Solution e2:
Solution f1:
New contribution margin per unit = $87 - $30 = $57 per unit
Total fixed costs = $315,000
Desired profit = $252,000
Desired contribution margin = $315,000 + $252,000 = $567,000
Desired sales volume in units = Desired contribution margin / contribution margin per unit = $567,000 / $57 = 9947 units
Desired sales in dollar = 9947 * $87 = $865,389
Solution f2:
Solution g:
contribution margin per unit = $80 - $30 = $50
Fixed costs = $280,000
Breakeven point in unit = $280,000 / $50 = 5600 units
Current sales volume = 10000 units
Margin of safety in units = 10000 - 5600 = 4400 units
Margin of safety in dollars = 4400 * $80 = $352,000
Margin of safety Percentage = 4400 / 10000 = 44%
Note: I have answered first 4 parts of question as per chegg policy, kindly post separate question for answer of remaining parts.
Trevino company Income Statement Particulars Amount Sales (10125*$80) $810,000.00 Variable cost (10125 * $24) $243,000.00 Contribution margin $567,000.00 Fixed costs $315,000.00 Net operating income $252,000.00Related Questions
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