Compute the contribution-margin ratio for the touring model.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Compute the contribution-margin ratio for the touring model.
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Required information
Problem 7-51 Cost-Volume-Profit Analysis with Income Taxes and Multiple Products (Appendix) (LO 7-1, 7-
2, 7-4, 7-5, 7-11)
[The following information applies to the questions displayed below.]
Alpine Thrills Ski Company recently expanded its manufacturing capacity. The firm will now be able to produce up to
34,000 pairs of cross-country skis of either the mountaineering model or the touring model. The sales department assures
management that it can sell between 28,000 and 32,000 units of either product this year. Because the models are very
similar, the company will produce only one of the two models.
The following information was compiled by the accounting department.
Selling price per unit
Variable costs per unit
Model
Mountaineering
$151.00
88.80
Touring
$139.00
88.80
Fixed costs will total $630,400 if the mountaineering model is produced but will be only $532,200 if the touring model is
produced. Alpine Thrills Ski Company is subject to a 30 percent income tax rate.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87153566-44ac-454a-878e-c47c690b1545%2F2e0ae7e8-7201-4045-9bf5-58d85c53dc37%2Fp2dgjx9_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
Problem 7-51 Cost-Volume-Profit Analysis with Income Taxes and Multiple Products (Appendix) (LO 7-1, 7-
2, 7-4, 7-5, 7-11)
[The following information applies to the questions displayed below.]
Alpine Thrills Ski Company recently expanded its manufacturing capacity. The firm will now be able to produce up to
34,000 pairs of cross-country skis of either the mountaineering model or the touring model. The sales department assures
management that it can sell between 28,000 and 32,000 units of either product this year. Because the models are very
similar, the company will produce only one of the two models.
The following information was compiled by the accounting department.
Selling price per unit
Variable costs per unit
Model
Mountaineering
$151.00
88.80
Touring
$139.00
88.80
Fixed costs will total $630,400 if the mountaineering model is produced but will be only $532,200 if the touring model is
produced. Alpine Thrills Ski Company is subject to a 30 percent income tax rate.
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