12 a the amount of revenue remaining after dedueting fixed costs b available to
ID: 2397314 • Letter: 1
Question
12 a the amount of revenue remaining after dedueting fixed costs b available to cover fixed costs and contnbule to income for e sales less fixed costs d unit selling price loss unt fxed costs Banachok, inc produces hair brushes The seling price is $20 per unit and the variable cosls per month are $4,800 I Banachek sells 15 more units 13 osts are 58 per brush eakeven, ow much does profit inorease as a result? a $180 b. $300 ?. $120 d. 3600 Con Nash drives for computers, which it sells for $20 each. Each flash pany produces drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were 34.20 por unit for a total of $4,200 for the month. If variable costs decrease month for Dodge Company? by 10%, what happens to the break-even ieved of units per a. Itis 10% higher than the original broak-even point b. R decreases about 12 units e It decreases about 30 units d it depends on the number of units the company expects to produce and sell. 15 The following monthly data are available for Wackadoos, Inc. which produces only one product Selling price per unit, $42, Unit variable expenses, $14; Total fixed expenses $42,000 Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June? a $70,000 b $105,000 c $63,000 d. $2,500 16 Buerhrle's CVP income statement included sales of 2,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $44,000. Net income is a $200,000 b. $80,000. c $76,000 d $36,000 In 2016, McDougal sold 3,000 units at $500 each. Variable expenses were $350 per unit, and fixed expenses were $195,000. The same expenses are expected for 2017. If break-even point in units for 20172 a. 1,300 17. variable expenses per unit and fixed McDougal cuts selling price by 4%, what is McDougal s b. 1,354 C. 1,440 d. 1,500 Use the following information for questions 18 and 19. Innova Discs has two divisions-Standard and Premium. Each division has hundreds of different ypes of golf discs and disc golf products. The following information is available: Sales Variable costs $400,000 280,000 $600,000 360,000 margin Total fixed costs $300,000Explanation / Answer
Solution 12:
Contribution margin is available to cover fixed cost and contribute to income for the company.
Hence option b is correct.
Solution 13:
contribution margin per unit = $20 - $8 = $12
If banachek sales 15 more unit beyond breakeven then profit will increase by = Nos of additional units * contribution margin per unit = 15 * $12 = $180
Hence option a is correct.
Solution 14:
New variable cost per unit = $6 - $6*10% = $5.40
New contribution margin per unit = $20 - $5.40 = $14.60
Fixed cost per month = $4,200
New breakeven point = $4,200 / $14.60 = 288 units
Existing breakeven point = $4,200 / $14 = 300 units
Decrease in breakeven point = 300 - 288 = 12 units
Therefore breakeven point decreases about 12 units.
Hence option b is correct.
Solution 15:
Contribution margin per unit = $42 - $14 = $28 per unit
Fixed expenses = $42,000
Breakeven sales units = $42,000 / $28 = 1500 units
Breakeven sales = 1500 * $42 = $63,000
Existing sales = 4000 * $42 = $168,000
Margin safety sales = $168,000 - $63,000 = $105,000
Hence option b is correct.
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