11. Calculate the break-even point in units and total sales dollars using the eq
ID: 2723082 • Letter: 1
Question
11. Calculate the break-even point in units and total sales dollars using the equation method. Total Per Unit % of sales Sales $90 100% Variable Expenses $60 67% Contribution Margin $30 33% Fixed Expenses $18,000 Break-even in units=____________ Break-even in total sales dollars=___________ 12. Using the Contribution Margin Method to calculate Target Profit sales and units given a target profit of $40,000. Total Per Unit % of sales Sales $200 100% Variable Expenses 170 68% Contribution Margin 80 32% Fixed Expenses 20,000 Target Profit Break-even units=¬¬¬¬¬____________ Target Profit Break-even sales=_____________ 13. Compute the Margin of Safety and the Margin of Safety Percentage from the data below. Selling Price $90 per unit Variable Expenses $45 per unit Fixed Expenses $18,000 Unit Sales 1,000 units Margin of Safety ¬¬¬¬¬______________ Margin of Safety Percentage____________ 14. Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow: Total Per Unit Sale $600,000 $50 Variable Expenses 456,000 38 Contribution Margin 144,000 $12 Fixed Expenses 100,000 Net Operating Income 44,000 1. What is the monthly break-even point in units sold and in sales dollars? 2. Without resorting to computations, what is the total contribution margin at break-even point? 3. How many units would have to be sold each month to earn a target profit of $21,000? Use the contribution method. Verify your answer by preparing a contribution format income statement at the target level of sales. 4. Refer to original data. Compute the company’s margin of safety in both dollar and percentage terms. 5. What is the company’s CM Ratio? If monthly sales increases by $60,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? 15. Reveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $100 per unit. Variable expenses are $60 per lantern, and fixed expenses associated with the lantern total $120,000 per month. 1. Compute the company’s break-even point in number of lanterns and total sales dollars. 2. If the variable expenses per lantern increase as a percentage of the selling price, will it result in higher or lower break-even point? Why? (Assume that the fixed expenses remain unchanged.) 3. At present, the company is selling 6,000 lanterns per month. The sales margin is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution income statements, would one under the present operating conditions, and one as operations appear after the proposed changes. Show both and per unit data on your statements. 4. Refer to the data in (3) above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $60,000 per month?
Explanation / Answer
11.
break even units = 18000/30=600
Break-even in total sales dollars=600*90=54000
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