Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $12 per unit, and fixed expenses total $140,000 per year. Its operating results for last year were as follows: Sales (24,000 units) 480,000 Variable expenses 288,000 Contribution margin 192,000 Fixed expenses 140,000 Operating income 52,000 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 point in sales dollars.
Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $12 per unit, and fixed expenses total $140,000 per year. Its operating results for last year were as follows: Sales (24,000 units) 480,000 Variable expenses 288,000 Contribution margin 192,000 Fixed expenses 140,000 Operating income 52,000 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 point in sales dollars.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit.
Variable expenses are $12 per unit, and fixed expenses total $140,000 per year. Its operating results for last
year were as follows:
Sales (24,000 units)
480,000
Variable expenses
288,000
Contribution margin
192,000
Fixed expenses
140,000
Operating income
52,000
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 point in sales dollars.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01fb319d-f364-4590-ab45-48289dbd6af0%2Fa544f4e0-77c3-4da2-a52a-265f4cd5e9ee%2F20qyho_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit.
Variable expenses are $12 per unit, and fixed expenses total $140,000 per year. Its operating results for last
year were as follows:
Sales (24,000 units)
480,000
Variable expenses
288,000
Contribution margin
192,000
Fixed expenses
140,000
Operating income
52,000
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 point in sales dollars.
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