AaBOCCL Aab AdBOCC AaßbCcL Aa D. A 鱼。田 1 Normal 1 No Spac. Heading 1 Heading 2 Title Su Paragraph Styles The large forward-facing statues in Job 3 sold at the following prices: 900 large forward-facing statue $150/ statue Golden Wolves Statue Company would like to stop manufacturing the small and large profile statues and only sell the large forward-facing statue. The company's contribution format inca statement for sales of this statue in 2017 is given below assuming that all fixed expenses are now assigned to this statue: Total Per Unit % of Sales Sales (900 units) Variable Expenses Contribution Margin Fixed Expenses $135,000 $11,985 $123,015 $18,535 $104,480 $150.00 100% 13.32 ? % $136.68 ? % Net Operating Income Step 1: Compute Golden Wolves Statue Company's contribution margin ratio and variable expense ra Step 2: Compute Golden Wolves Statue Company's break-even point in both unit sales and dollar sal. using the equation method. Step 3: Assume that sales of the large forward-facing statue increase by $6,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increas due to sales of this statue? Use the contribution margin ratio to compute your answer. Step 4: Refer to the original data. Assume that Corey wants the company to earn a profit of at least $130,000 next year. How many units will have to be sold to earn this target profit?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Transcribed Image Text:**Golden Wolves Statue Company's Sales Analysis** The large forward-facing statues in Job 3 sold at the following prices: 900 large forward-facing statues - $150/statue. Golden Wolves Statue Company would like to stop manufacturing the small and large profile statues and only sell the large forward-facing statue. The company's contribution format income statement for sales of this statue in 2017 is given below assuming that all fixed expenses are now assigned to this statue: | | Total | Per Unit | % of Sales | |------------------------|-------------|-----------|-------------| | **Sales (900 units)** | $135,000 | $150.00 | 100% | | **Variable Expenses** | $11,985 | $13.32 | ? % | | **Contribution Margin**| $123,015 | $136.68 | ? % | | **Fixed Expenses** | $18,535 | | | | **Net Operating Income**| $104,480 | | | **Step-by-step Analysis:** **Step 1:** Compute Golden Wolves Statue Company’s contribution margin ratio and variable expense ratio. **Step 2:** Compute Golden Wolves Statue Company’s break-even point in both unit sales and dollar sales using the equation method. **Step 3:** Assume that sales of the large forward-facing statue increase by $6,000 next year. If cost behavior patterns remain unchanged, by how much will the company’s net operating income increase due to sales of this statue? Use the contribution margin ratio to compute your answer. **Step 4:** Refer to the original data. Assume that Corey wants the company to earn a profit of at least $130,000 next year. How many units will have to be sold to earn this target profit?

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