1)The manager of Able Car Inspection reviewed his monthly operating costs for th
ID: 2418428 • Letter: 1
Question
1)The manager of Able Car Inspection reviewed his monthly operating costs for the past year. His costs range from $4,100 for 1,100 inspections to $3,700 for 700 inspections.
1. Calculate variable cost per inspection. use the high-low method. round to the nearest cent
2. calculate the total fixed costs
3. write the equation and calculate the operating costs for 900 inspections
4. Draw a graph illustrating your total cost under this plan. show your costs at 700, 900, and 1,100 inspections
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2) For its top managers, Airborn Travel formats its income statements as follows:
Airborn Travel
contribution margin income statement
three months ended March 31, 2012
Sales revenue $318500
Variable costs $111475
contribution margin 207025
fixed costs 176000
operating income $31025
Airborn's relevant range is between sales of $253000 and $366000
1) calculate the contribution margin ratio
2) Prepare two contribution margin income statements: one at the $253000 level and one at the $366,000 level. (Hint: the proportion of each sales dollar that goes toward variable costs is constant within the relevant range.) enter losses with a minus sign or parentheses
3) compute breakeven sales in dollars.
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3) Hang Ten, Co., produces sports socks. The company has fixed costs of $91,080 and variable costs of $0.81 per package. Each package sells for $1.80.
1. Compute the contribution margin per package and the contribution margin ratio. (round answers to 2 decimal places)
2. Find the breakeven point in units and in dollars, using the contribution margin approach.
Explanation / Answer
1./
1.
VARIABLE COST PER INSPECTION = CHANGE IN TOTAL COST / CHANGE IN TOTAL INSPECTION
= ($4100 - $3700) / 1100 - 700
= $400 / 400
= $1 PER INSPEECTION
2.
TOTAL COST = VARIABLE COST + FIXED COST
$4100 = (1100 * $1) + FIXED COST
FIXED COST = $3000
3.
OPERATING COST FOR 900 INSPECTION = (900 * $1) + $3000
= $3900
4.
I DON'T KNOW HOW TO PUT A GRAPH HERE BY USEING THE SOFTWARE.
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2./
1.
SALES REVENUE = $318500
LESS VARIABLE COST = ($111475)
CONTRIBUTION MARGIN = $207025
CONTRIBUTION MARGIN RATIO ($207025 / $318500) * 100 = 65%
2.
CONTRIBUTION MARGIN INCOME STATEMENT FOR SALES $253000
CONTRIBUTION MARGIN INCOME STATEMENT FOR SALES $366000
3.
BREAK EVEN SALES IN DOLLAR = TOTAL FIXED COST / CONTRIBUTION MARGIN RATIO
= $176000 / 65%
= $270769.23
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3./
1.
SALES REVENUE PER PACKAGE = $1.80
LESS VARIABLE COST PER PACKAGE = ($0.81)
CONTRIBUTION MARGIN PER PACKAGE=$0.99
CONTRIBUTION MARGIN RATIO ($0.99 /$1.81) * 100 = 55%
2.
BREAK EVEN POINT IN UNITS = TOTAL FIXED COST / CONTRIBUTION MARGIN
= $91080 / $0.99
= 92000 UNITS
BREAK EVEN POINT IN DOLLAR = TOTAL FIXED COST / CONTRIBUTION MARGIN RATIO
= $91080 / 55%
= $165600
PARTICULLAR AMOUNT $ SALES REVENUE 253000 LESS VARIABLE COST ($111475 / $318500) * $253000 88550 CONTRIBUTION MARGIN 164450Related Questions
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