EXERCISE 2-4 Computing and Using the CM Ratio LO2-3Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total vari-able expenses were $120,000, and fixed expenses were $65,000.Required:What is the company's contribution margin (CM) ratio?What is the estimated change in the company's net operating income if it can increase totalsales by $1,000?1.2.Taoine Roont mos of bloCante Sallind Drice and Volume 102-4W

1.Contribution margin = Total sales - Total Variable Cost

Answered: EXERCISE 2-4 Computing and Using the CM…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4MC: A companys contribution margin per unit is $25. It the company increases its activity level from 200...

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Question 2 Style photo sells only one product. The statement of comprehensive income for 2021 is provided below: Sales 60,000 Less variable expenses -30,000 Contribution margini 30,000 Less fixed expenses -22,500 Net income 7,500 Required: Calculate with workings: a. The contribution margin ratio in percentage. b. Three breakeven point in total sales ringgits.
Question 2 Style photo sells only one product. The statement of comprehensive income for 2021 is provided below: Sales 60,000 Less variable expenses -30,000 Contribution margin 30,000 Less fixed expenses -22,500 Net income 7,500 Required: Calculate with workings: The contribution margin ratio in percentage. Three breakeven point in total sales ringgits. The sales in RM if the company wants to achieve RM40,000 in net income.
Question 4.4 The following is Silver Corporation's contribution format income statement for last month: Sales $1,400,000 Less: variable expenses 800,000 Contribution margin 600,000 Less: fixed expenses 400,000 Operating income $200,000 The company has no beginning or ending inventories and produced and sold 20,000 units during the month. Required: What is the company's contribution margin ratio? What is the company's break-even in units? If sales increase by 100 units, by how much should operating income increase? How many units would the company have to sell to attain target operating income of $225,000? What is the company's margin of safety in dollars? What is the company's degree of operating leverage?
Question 5 Dejounte Corp had a margin of safety of $133086 last month, with sales revenue of $866422 and fixed costs of $262670. What is the contribution margin ratio? Percentage Round your answer 2 decimals. For example, if your answer is .1012, answer 10.12
Question 2: Kevin Co.’s projected contribution-format income statement for the upcoming month is shown below: Sales (500 units) $10,000 Variable expenses 4,000 Contribution margin 6,000 Fixed expenses 1,000 Net operating income $5,000 Required: Compute the breakeven point in units. 2Compute the breakeven point in dollars. 3. If the company wishes to earn a monthly target profit of $10,000, how many units must be sold each month? 4. Compute the company’s margin of safety. State your answer in both dollar and percentage terms. 5. The company’s manager thinks that adding a salaried sales staff member at a cost of $2,000 per month will increase sales by $4,000 per month. If he is correct, what will be the net dollar advantage or disadvantage of making this change? 6. Refer to the original data, the company’s manager believes that a new production process will improve profitability. He plans to add new machinery that will cut…
Question 3 Study the information given below and answer: 3.3 Calculate the new total Marginal Income and Net Profit/Loss if an increase in advertising expense by R100 000 is expected to increase sales by 400 units. INFORMATION Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022: 1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed marketing and administrative costs Sales commission 2 400 units R1200 R288 R192 R96 R216 960 R144 000 5%
Question 6, Part 3
QUESTION 14 THE FOLLOWING INFORMATION IS USED FOS QUESTIONS 13-19. Test Company reported the following income statement for the most recent period. Sales (8,000 units) Variable expenses Contribution margin Fixed expenses Operating income $160,000 96.000 64,000 30,000 $34.000 Determine the number of units Test Company must sell to earn operating income of $50,000. Note: Give your answer using commas. Do not include the word "units." Example: 12,345
Question 3.1.4 Total contribution margin and operating profit (loss), if the selling price increases by 10% and advertising costs increases by R20 000
Problem II. Omega Enterprises sells two products, Model E100 and F900. Monthly sales and the contribution margin ratios for the two products, follow: Product E100 F900 Total Sales P 700,000 P 300,000 P 1,000,000 Contribution margin ratio 60% 70% The Company’s fixed expenses total P598,500 per month. What is the company’s total contribution margin ratio? What is the company’s total net operating income? The break-even point for the company based on the current sales mix is ______.
Question 5A .
Q3 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $486,000 Per Unit $30 12 194,400 Sales Variable expenses Contribution margin Fixed expenses Operating income Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars Total contribution margin 2. Without resorting to computations, what is the total contribution margin at the break-even point? Units sold 3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method. 291,600 $18 233,280 $ 58,320 units Menlo Company Contribution Income Statement. Total 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Unit sales required units units Per unit 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month…

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