00:19:27 Submit Quiz - This Question: 1 pt 10 of 10 (9 complete) This Quiz: 10 p
ID: 2402126 • Letter: 0
Question
00:19:27 Submit Quiz - This Question: 1 pt 10 of 10 (9 complete) This Quiz: 10 pts p Curvy Confections is considering building a new plant in Europe. lit predicts sales at the new plant to be 45,000 units at $7.00/unit. Below is listing of estimated %Of Annual Expense that are Fixed 10% Total Annual Materials Labor $15,000 $40,000 $55,000 $20,000 Marketing/Admin A European firm was contracted to sell the product and will receive a facility. (Round intermediary dollar calculations to the nearest whole dollar and round percentages to one-tenth percent.) commission of 20% ofthe sales price. No U.S. home office expenses wil be allocated to the new OA. 12.1%. OB. 123.8%. oc. 50.8 OD, 86.7%. Click to select your answer. 12Explanation / Answer
Correct Ansewer (76.25%)
Explanation
Income Statement
Sales
$ 315,000.00
Less: Variable Costs
Material
$ 13,500.00
Labor
$ 32,000.00
Variable Overheads
$ 38,500.00
Marketing/Admin Expense
$ 8,000.00
Selling expense
$ 63,000.00
Total Variable Cost
$ 155,000.00
Contribution Margin
$ 160,000.00
Less Fixed cost
Material
$ 1,500.00
Labor
$ 8,000.00
Fixed Overheads
$ 16,500.00
Fixed Marketing/Admin Expense
$ 12,000.00
Total Fixed Cost
$ 38,000.00
Net Profit
$ 122,000.00
Breakeven in units
(Fixed cost/Contribution margin)
Breakeven in units
(38000/3.556)
Breakeven in units
10686.16
Breakeven in Dollars
$ 74,803.15
Margin of safety
(actual sales-breakeven Point)/Actual Sales
Margin of safety
(315000-74803.15)/315000
Margin of safety
76.25%
Note- None of the options are correct
Income Statement
Sales
$ 315,000.00
Less: Variable Costs
Material
$ 13,500.00
Labor
$ 32,000.00
Variable Overheads
$ 38,500.00
Marketing/Admin Expense
$ 8,000.00
Selling expense
$ 63,000.00
Total Variable Cost
$ 155,000.00
Contribution Margin
$ 160,000.00
Less Fixed cost
Material
$ 1,500.00
Labor
$ 8,000.00
Fixed Overheads
$ 16,500.00
Fixed Marketing/Admin Expense
$ 12,000.00
Total Fixed Cost
$ 38,000.00
Net Profit
$ 122,000.00
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