Explain and Show work Required information [The following information applies to
ID: 2430134 • Letter: E
Question
Explain and Show work
Required information [The following information applies to the questions displayed below.] Adams Company makes and sells products with variable costs of $47 each. Adams incurs annual fixed costs of $22,400 The current sales price is $63 f. If variable cost rises to $39 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 F1 Required F2 If variable cost rises to $39 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 F Required F2Explanation / Answer
In CVP (Cost Volume Profit) Analysis
Required Sales (Units) = Fixed Cost + Desired Profit / Contribution per unit
Required Sales (dollars) = Fixed Cost + Desired Profit / Contribution Margin ratio
Contribution Per Unit = Sales Less Variable Cost
= $ 63 - $ 39
= $ 24 per unit
Contribution Margin Ratio = Contribution / Sales
= $ 24 / $ 63
= 0.3810
Required Sales (units) to earn the Desired Profit of $ 4,800 = ( $ 22,400 + $ 4,800 ) / $ 24
= 1133.33 units or 1133 or 1134 units
Required Sales (dollar) to earn Desired Profit of $ 4800 = ( $ 22,400 + $ 4,800 ) / 0.3810
= $ 71,400
Contribution Margin Income Statement
Particulars Amount Sales (1133.33 * 63 ) $ 71,400 Less: Variable Cost (1133.33 * 39 ) $ 44,200 Contribution $ 27,200 Less: Fixed Cost $ 22, 400 Profit $ 4,800Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.