Last month, Laredo Company sold 510 units for $55 each. During the month, fixed costs were $5,478 and variable costs were $22 perunit.Required:1. Determine the unit contribution margin and contribution margin ratio.2. Calculate the break-even point in units and sales dollars.3. Compute Laredo's margin of safety in units and as a percentage of sales.Complete this question by entering your answers in the tabs below.Required 1 Required 2Required 3Determine the unit contribution margin and contribution margin ratio.Unit Contribution MarginContribution Margin Ratio%< Required 1Required 2 >

Cost volume profit analysis is the technique used by management for decision-making. The methods…

Answered: Last month, Laredo Company sold 510…

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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The following monthly data are available for the Charger Company and its only product, Product AJ: Sales (500 units) Variable expenses Contribution margin Fixed expenses Net income Total $137,500 55,000 $ 82,500 52,800 $ 29,700 Per Unit $ 275 110 $ 165 Required: a) Without resorting to calculations, what is the total contribution margin at the break-even point? essibility: Good to go b) Management is contemplating the use of plastic gearing rather than metal gearing in Product SW. This change would reduce variable costs by $15. The company's marketing manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 450 units per month. Should this change be made? c) Assume that Challenger Company is currently selling 500 units of Product SW per month. Management wants to increase sales and feels that this can be done by cutting the selling price by $25 per unit and increasing the advertising budget by $25,000 per…
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Verify your answer by preparing a contribution format income statement at the target sales level.
Last month when Holiday Creations, Incorporated, sold 41,000 units, its sales, variable expenses, and fixed expenses were $164,000, $136,120, and $38,600, respectively. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the company's variable expense ratio? Note: Do not round intermediate calculations. 1. Contribution margin ratio 2. Variable expense ratio 17 % %
4 )
[The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 70,000 Variable expenses 38,500 Contribution margin 31,500 Fixed expenses 23,310 Net operating income $ 8,190 1. What is the contribution margin per unit? (Round your answer to 2 decimal places.) 2. What is the contribution margin ratio? 3. What is the variable expense ratio? 4. If sales increase to 1,001 units, what would be the increase in net operating income?
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Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 20,000 13,000 7,000 3,780 $ 3,220 11. What is the margin of safety in dollars? What is the margin of safety percentage? Margin of safety in dollars Margin of safety percentage %
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Claimjumper $57,600 38,400 $ 19, 200 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Sales Variable expenses Contribution margin Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Engberg Company Contribution Income…
6. Atlantic Manufacturing produces and sells children’s bikes at an average price of $80. Its costs are as follows: direct materials = $14; direct labour = $8; variable overhead = $3; sales commission is 10% of price. Its fixed monthly costs are $42,000. Required: 1. Using the above cost data, set up a monthly cost equation. 2. What is the company’s contribution margin percentage? (Round your answer to 2 decimal places.)

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