Exercise 20.10 (Algo) Computing Contribution Margin Ratio and Margin of Safety (LO20-4, LO20-5) The following information relates to the only product sold by Mastrolia Manufacturing. Sales price per unit Variable cost per unit Fixed costs per year 45 27 295,000 a. Compute the contribution margin ratio and the dollar sales volume required to break even. b. Assuming that the company sells 20,000 units during the current year, compute the margin of safety (in dollars). a. Contribution margin ratio % Break even sales dollars b. Margin of safety (in dollars)

Exercise 20.10 (Algo) Computing Contribution Margin Ratio and Margin of Safety (LO20-4, LO20-5) The following information relates to the only product sold by Mastrolia Manufacturing. Sales price per unit Variable cost per unit Fixed costs per year 45 27 295,000 a. Compute the contribution margin ratio and the dollar sales volume required to break even. b. Assuming that the company sells 20,000 units during the current year, compute the margin of safety (in dollars). a. Contribution margin ratio % Break even sales dollars b. Margin of safety (in dollars)

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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Benovan Co. reports the following data: Sales (@ unit selling price of P20) Less Variable Costs Contribution Margin Less Fixed Costs Operating Profit P 840,000 546.000 P 294,000 168.000 P 126,000 Rased on the above data, the following were determined by an accounting staff: ======== Sales Breakeven Sales in Breakeven Sales in units Volume UVC VC% UCM CM% DOL pesos The manager consulted you regarding the effects of the following changes on the company's breakeven sales in units, breakeven sales in pesos, Degree of Operating Leverage (DOL) and Operating Profit. Assuming all other factors remain the same, the following independent proposals were made: 1. Increase the sales volume by 25% New Sales Volume New BES in units New BES in Pesos New Operating Profit New DOL 2. Increase the fixed costs by 10% New DOL New Operating Profit New BES in Pesos New BES in units 3. Increase the unit variable costs to P14 New Operating Profit New DOL New BES in Pesos New BES in units Based on the three…
Ex.3.
Problem 1 The M/S Smooth flow Company manufactures a certain fountain pen. The fixed costs of the company are RO.300,000 per year. The unit selling price (net) is RO.8 and the unit variable cost is RO.5. At present the firm manufactures and sells 140,000 fountain pens. Determine: (i) Break Even Quantity (ii) Break Even Sales (iii) Margin of Safety In terms of units In terms of value (iv)Plot the Break Even Chart
The information below relates to the only product of Catherine Company: Exercise 4-13 Sales price per unit Variable cost per unit Fixed costs per year P48 36 P240,000 REQUIRED: i Compute the contribution margin ratio and the peso sales volume required to break-even. 2. Assuming that the company sells 75,000 units during the year, compute the margin of safety sales volume. Exercise 4-14 Cristina Corporation has fixed costs of P72,000 per month. It sells two products as follows: Sales Variable Contribution Price Cost Margin Product A P20 P8 P12 B 20 14 REQUIRED: 1. What monthly peso sales volume is required to break-even if three units of product A are sold with one unit of product B? 2. What monthly peso sales volume is required to break-even if one unit of product A is sold with three units of product B?
Please solve this question X limited has provided the following informationSelling Price Rs. 20 per unit Variable Manufacturing Cost Rs. 11 per unit Variable Selling cost Rs. 3 per unit Fixed Factory Overheads Rs. 5, 40, 000 per year Fixed Selling Cost is Rs. 252, 000 per year You are required to calculate the followings : (1) Break Even point (ii) PV ratio (iii) Number of units that must be sold to earn a profit of Rs. 60,000 per year(iv) Impact of decrease in selling price by 10 percent on Breakeven Point.(v) Impact of increase in selling price by 20% on Break Even point.
For items 22 to 24: The Warner Company sells its only product for P30 and the variable costs amount to P21 per unit. Fixed cost for each year is P270,000. 22. Assuming the desired profit for next year (if all costs and selling price remains the same) is placed at P90,000, what is the margin of safety in units? A. 30,000 B. 20,000 C. 10,000 D. 40,000 23. What will be the projected sales in pesos with such desired profits of P90,000? A. P 900,000 B. P 1,200,000 C. P 300,000 D. P 600,000 24. If instead, the desired profit is 5% of sales, how many units must be sold to achieve such A. 36,000 B. 40,000 C. 25,714 D. 31500
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Exercise 20.3 (Algo) Computing Required Sales Volume (LO20-4, LO20-5) The following is information concerning a product manufactured by Ames Brothers. Sales price per unit Variable cost per unit Total fixed manufacturing and operating costs (per month) 78 43 430,000 ces a. Determine the unit contribution margin. b. Determine the number of units that must be sold each month to break even. (Round your answer to the nearest whole number.) c. Determine the number of units that must be sold to earn an operating income of $234,000 per month. (Round your answer to the nearest whole number.) a. Unit contribution margin b. Break-even units C. Target sales in units 23 NOV 11 itv li 1 W %24 ...
PROBLEM SOLVING 1. ABC Mfg. Co. buy and sells its lone product on which the following data are given: Sales volume per annum Unit selling price Production cost per unit: Direct materials Direct labor Variable factory overhead Fixed factory overhead (P25,000/20,000 units) Variable operating expense per unit Fixed operating expenses (P10,000/20,000 units) P1.00 0.50 a. Should the order be accepted? Why? 25,000 units P10.00 P3.50 2.50 2.00 1.25 A special order is received for P2,000 units from a remote market at P7.90, FOB destination. Packing and shipping costs are estimated at P1,200. Decision making: (show computation) b. What is the BEP price or sales cut-off price for the special order?
Sales (18,00e units) Variable expenses Contribution margin Fixed expenses $ 368,008 144,e00 216,eee 188,eee $ 36,000 Operating incone Required: Answer each question Independently based on the original data: 1. What is the product's CM ratio? 2 Use the CM ratio to determine the break-even polnt in sales dollars.
A. Determine the missing amounts S.No Unit Selling Price Unit Variable Cost Contribution Margin per unit Contribution Margin Ratio 1 2 3 550 1500 (e) 370 (c) (f) (a) 600 900 (b) (d) 30 B. For Al Farabi Company, variable costs are 75% of sales, and fixed costs are $210,000.Management’snet income goal is $70,000. Compute the required sales needed to achieve management’s target net income of $70,000. (Use the mathematical equation approach.) C. Company A’s costs are mostly variable, whereas Company B’s costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain.