Note : the Answer should be Computerized Solved Section 1 (5 Marks) [CLo 1] ABS\

Question

Note : the Answer should be Computerized Solved

Section 1 (5 Marks) [CLo 1] ABS's Cellular sells phones for $120. The unit variable cost per phone is $72 plus selling commission of 10%. Fixed m costs total $1,550 per month, while fixed selling and administrative costs total $2,500. Required: What is the contribution margin per phone? What is the contribution margin ratio? 1. 2. What is the breakeven point in phones? Interpret. How many phones must be sold to earn a targeted profit of s9,500? Interpret. Calculate the margin of safety. Interpret. 3. 4. 5.

Explanation / Answer

AS per chegg guidelines when there are more than 4 parts to a question then we have to first 4 parts. 1) Calculation of contribution margin per phone: Selling commission= 120*0.10=$12 Contribution margin per phone= Selling price- variable cost per phone                                                                =120-(72+12)=120-84=$36 Contribution margin per phone=$36 2) Calculation of contribution margin ratio: Contribution margin ratio= Contribution margin/ selling price*100                                                     =36/120*100=30% Contribution margin ratio= 30% 3) Calculation of break even point: Total fixed cost=1550+2500= $4050 Break even sale in units= Fixed cost/ contribution per unit                                               = 4050/36=112.5 Break even point in phones= 112.5 4) Calculation of number of phones: Profit= $9500 Number of phones= (Fixed cost+ profit)/ contribution per unit                                             =(4050+9500)/36=376.39 Number of phones=376.39

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.