A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of40%. If the company's actual sales are $224,000, its margin of safety is:Multiple ChoiceOO$32,000$192,000$128,000$96,000

Margin of Safety = Current Sales - Break Even Sales and Break Even sales = Fixed Cost /…

Answered: A company makes a single product that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Giddings Company manufactures and sells a single product, Product G. The product sells for $60 per unit and has a contribution margin ratio of 40 percent. The company's monthly fixed expenses are $28,800. If the selling price is reduced by 5%, variable costs per unit reduced by $1.00, and fixed costs increased to a total of $40,750, how many units would need to be sold to earn operating income equal to 10% of sales revenue? (Ignore income taxes.)
Houpe Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 140 100% Variable expenses 42 30% Contribution margin $ 98 70% Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept a decrease in their salaries of $58,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on the company's monthly net operating income of this change?
ok ces O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 22%. Management is considering adding a new product that will require an additional $10,500 per month of fixed expenses and will have variable expenses of $6.5 per unit. Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 22%. Note: Round your answer to 2 decimal places. b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $8,500. Note: Do not round intermediate calculations. a. Selling price b. Number of units per unit
Ferkil Corporation manufacturers a single product that has a selling price of $20.00 per unit. Fixed expenses total $63,000 per year, and the company must sell 9,000 units to break even. If the company has a target profit of $17,500, sales in units must be: Multiple Choice O 9,875 units (O 11,500 units 12,150 units 10,682 units
If a company has fixed costs of $6.000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? А. 100 В. 180 С. 200 D. 2,000
Halifax Products sells a product for $118. Variable costs per unit are $67, and monthly fixed costs are $168,300. a. What is the break-even point in units? Break-Even Point units b. How many units would need to be sold to earn a target profit of $102,000? Total Required Sales units c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars? Margin of Safety
Assume the following information: Amount Per Unit Sales $ 300,000 $ 40 Variable expenses 120,000 16 Contribution margin 180,000 $ 24 Fixed expenses 60,000 Net operating income $ 120,000 If the company decides to pay a sales commission of 2.5% for each unit sold above the break-even point, what net operating income will it earn if it sells 4,600 units? Multiple Choice $50,800 $45,800 $50,400 $48,300
Kuzio Corporation produces and sells a single product. Data concerning that product appear below. Selling price Variable expenses Percent of Per Unit $ 130 78 $ 52 Sales 100% 60% 40% Contribution margin The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager belleves that a $5,000 Increase in the monthly advertising budget would result in a 140 unit increase in monthly sales volume. What should be the overall effect on the company's monthly net operating Income of this change? Multiple Choice Increase of $7,280 decrease of $2,280 Increase of $2,280 decrease of $5,000
Craylon Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. The operating income for the next month is : Select one: a. 15,000 b. 60,000 c. 135,000 d. 75,000
firm has fixed cost of $50,000 per month and variable manufacturing costs of $1.25 per unit. They sell their units for $3.25 each. What is the annual sales volume units required to break even? Multiple Choice 300,000 30,000 10,400 2.500
Roseberg Theater sells tickets for dinner and a show for $60 each. The cost of providing dinner is $31 per ticket and the fixed cost of operating the theater is $65,000 per month. The company can accommodate 15,000 patrons each month. What is the contribution margin ratio? 51.67% 207% 48.33% 40.00%
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A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is: Multiple Choice $32,000 $192,000 $128,000 $96,000