General Accounting Eastland Corp. had total variable costs of$155,306, total fixed costs of $119,500, andtotal revenues of $254,600.a. Calculate contribution margin ratio.b. Compute the required sales in dollars tobreak-even.

Step 1: Define Contribution Margin RatioThe contribution margin ratio shows the contribution margin…

Answered: Eastland Corp. had total variable costs…

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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APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company's product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a per-unit basis.…
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Eastland Corp. had total variable costs of $155,306, total fixed costs of $119,500, and total revenues of $254,600. a. Calculate contribution margin ratio. b. Compute the required sales in dollars to break-even.