Horizon Sports plans to sell 5,200 bicycle helmets at $78 each in the coming year. The unit variable cost is $48.60 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $22,000, and fixed selling and administrative expenses are $33,500. I. Calculate the variable cost ratio. 2. Calculate the contribution margin ratio.

Horizon Sports plans to sell 5,200 bicycle helmets at $78 each in the coming year. The unit variable cost is $48.60 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $22,000, and fixed selling and administrative expenses are $33,500. I. Calculate the variable cost ratio. 2. Calculate the contribution margin ratio.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: The current product mix is 4:3:2. The three models share total fixed costs of $430,000. Calculate the sales price per composite unit. What is the contribution margin per composite unit? Calculate Manatoahs break-even point in both dollars and units. Using an income statement format, prove that this is the break-even point.
Calculate the variable cost ratio?
a) Ceria Company plans to sell 5,000 bicycle helmets at RM75 each in the coming year. Unit variable cost is RM45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals RM49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: Calculate the break-even number of helmets. Check your answer by preparing a contribution margin income statement based on the break-even units.
Refer to the list below for the exact wording of an amount description within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed cost Total variable cost Calculate the total variable cost per unit. Variable cost per unit Calculate the total fixed expense for the year. Total fixed expense for the year Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 30 Direct labor per helmet 8 Variable factory overhead per helmet 4 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3 per helmet; fixed selling and administrative expense totals $29,500. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin income statement for Head-First Company for the…
Calculate the number of helmets Head-First must sell to earn operating income of $81,900. _____________helmets Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed cost Total variable cost Units to Earn Target Income Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $81,900. 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated
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Head-First Company plans to sell 4,200 bicycle helmets at $67 each in the coming year. Unit variable cost is $44 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $37,950 (includes fixed factory overhead and fixed selling and administrative expense). Calculate the break-even number of helmets. Check your answer by preparing a contribution margin income statement based on the break- even units.
Calculate the total variable cost per unit
How much is the contribution margin?
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