Austin Co. plans to manufacture and sell electronic products. The projected data for producing its products for a typical year is as follows: Budgeted sales (in units) 1,200 $100 Variable costs per unit $80 $20,000 20% Selling price per unit Total fixed costs Income tax rate Desired profits after tax $16,000 Required) Please answer the following questions and show all your works (formula and numbers) to get full credits. a. What are the contribution margin per unit and CM ratio? b. How many units (per year) would it have to produce in order to break even? c. To earn the desire after-tax profits, how many units (per year) would it have to sell/produce? d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define what is meant by the MOS. e. Calculate the degree of operating leverage if the budgets amount (per year) are sold. Define what is meant by the DOL.
Austin Co. plans to manufacture and sell electronic products. The projected data for producing its products for a typical year is as follows: Budgeted sales (in units) 1,200 $100 Variable costs per unit $80 $20,000 20% Selling price per unit Total fixed costs Income tax rate Desired profits after tax $16,000 Required) Please answer the following questions and show all your works (formula and numbers) to get full credits. a. What are the contribution margin per unit and CM ratio? b. How many units (per year) would it have to produce in order to break even? c. To earn the desire after-tax profits, how many units (per year) would it have to sell/produce? d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define what is meant by the MOS. e. Calculate the degree of operating leverage if the budgets amount (per year) are sold. Define what is meant by the DOL.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
solve d and e parts only
Transcribed Image Text:Austin Co. plans to manufacture and sell electronic products. The projected data for
producing its products for a typical year is as follows:
Budgeted sales (in units) 1,200
$100
Selling price per unit
Variable costs per unit $80
$20,000
20%
Total fixed costs
Income tax rate
Desired profits after tax $16,000
Required) Please answer the following questions and show all your works (formula and
numbers) to get full credits.
a. What are the contribution margin per unit and CM ratio?
b. How many units (per year) would it have to produce in order to break even?
c. To earn the desire after-tax profits, how many units (per year) would it have to
sell/produce?
d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define
what is meant by the MOS.
e. Calculate the degree of operating leverage if the budgets amount (per year) are
sold. Define what is meant by the DOL.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education