Kim company plans to sell 10,000 t-shirts at $19.30 Kim Company plans to sell 10,000 T-shirts at $19.30 each in thecoming year. Product costs include:Direct materials per T-shirt - $8.30Direct labor per T-shirt - $2.30Variable overhead per T-shirt - $1.54Total fixed factory overhead - $42,000Variable selling expense is the redemption of a coupon, whichaverages $1.10 per T-shirt; fixed selling and administrative expensestotal $12,600.Calculate the contribution margin ratio.

Explanation of Contribution Margin Per Unit:The contribution margin per unit is the amount left over…

Answered: Kim Company plans to sell 10,000…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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Similar questions

Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?
Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.
Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costsinclude: Direct materials per T-shirt $5.75Direct labor per T-shirt $1.25Variable overhead per T-shirt $0.60Total fixed factory overhead $43,000 Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.Required:1. Calculate the:a. Variable product cost per unitb. Total variable cost per unitc. Contribution margin per unitd. Contribution margin ratio (rounded to four significant digits)e. Total fixed expense for the year2. Prepare a contribution-margin-based income statement for Super-Tees Company for thecoming year.3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new valuesfor the following:a. Variable product cost per unitb. Total variable cost per unitc. Contribution margin per unitd. Contribution margin ratio (rounded to four…
What is the contribution margin ratio?
Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow: Selling price per unit P35 Manufacturing cost P4,000 per month plus P17 per unit Administrative expense P2,500 per month plus P2.50 per unit Sales commissions 15% of sales Advertising expense P2,000 per month If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be:
Harry Company produces shoes. Harry plans to sell 29000 pairs of shoes at a selling price of $59 per unit over the next month. Harry estimates the following costs for the next month: Cost Formula COGS $28/pair Sales Commission 4% of sales Employees' Salaries $87,000 per month Depreciation $300 per month Shipping $32,000 per month + $3/pair Presuming both use the same costing system, what is the difference between the net operating income calculated on traditional format income statement and that on a contribution format income statement for the next month (in dollars)?

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