Maple Manufacturing has provided its contribution format income statement for March: Sales (8,000 units)..............$240,000 Variable expenses................$144,000 Contribution margin..............$96,000 Fixed expenses...................$72,000 Net operating income...........$24,000 If the company sells 8,500 units, what is the total contribution margin?
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- The following is last month's contribution format income statement: Sales (12 000 units) ................ R1 200 000 Less variable expenses .............. 700 000 Contribution margin ................. 500 000 Less fixed expenses ................. 300 000 Net income .......................... R 200 000 What is the company's margin of safety percentage to the nearest whole percent? A. 42% B. 17% C. 20% D. 40%Prepare a contribution margin format income statement; calculate breakeven point Presented here is the income statement for Fairchild Co. for March:Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,000Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.Required:a. Rearrange the preceding income statement to the contribution margin format.b. Calculate…Menlo Company distributes a single product. The company’s sales and expenses for last month follow:Total Per UnitSales .................................................... $450,000 $30Variable expenses ............................... 180,000 12Contribution margin ............................. 270,000 $18Fixed expenses ................................... 216,000Net operating income .......................... $ 54,000Required:1. What is the monthly break-even point in units sold and in sales dollars?2. Without resorting to computations, what is the total contribution margin at the break-even point?3. How many units would have to be sold each month to earn a target profit of $90,000? Use the formulamethod. Verify your answer by preparing a contribution format income statement at the target saleslevel.4. Refer to the original data. Compute the company’s margin of safety in both dollar and percentageterms.5. What is the company’s CM ratio? If sales increase by $50,000 per month and there is…
- The following is last month's contribution format income statement: Sales (8 000 units) ................ R800 000 Less variable expenses ............. 500 000 Contribution margin ................. 300 000 Less fixed expenses ................. 200 000 Net income .......................... R100 000 What is the company's degree of operating leverage? A. 0.125 B. 8.0 C. 3.0 D. 0.333Sensabaugh inc, a company that produces and sells a single product, has provided its Contribution format income statement for january: sales (1,800 units).........$91,800 Variable expenses..........54,400 Contribution margin........ 32,400 27,000 Fixed expenses... Net operating income.….…........... 5,400 If the company sells 1,600 units, its total contribution margin should be closest to: 22,200 28,800 4,800 32,400Prepare a contribution margin format income statement; calculate breakeven point Presented here is the income statement for Big Surf, Inc., for the monthof May:Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,000Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,500Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,500Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,500)Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.Required:a. Rearrange the preceding income statement to the contribution margin format.b. If…
- Prepare a contribution margin format income statement; answer what-ifquestions Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $105,000Cost of goods sold ($8,000 1 $3.60/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,000Operating expenses:Selling ($1,500 1 $0.80/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500Administration ($4,000 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,000Required:a. Prepare an income statement in the contribution margin format.b. Calculate the…Prepare a contribution margin format income statement; answer what-ifquestions Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units. Cost formulas also are shown:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000Cost of goods sold ($36,000 1 $5.20/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000Operating expenses:Selling ($9,200 1 $0.30/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200Administration ($18,800 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,800Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,000Required:a. Prepare an income statement in the…Sales (19,500 units × $30 per unit). . . . . . . . . . . . . . . . . . . . . . . . . $ 585,000 Variable expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409,500 Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,500 Fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000 Net operating loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,500)Required: 1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income? 3. Refer to the original data. The sales manager is convinced that…
- Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format incomestatement for a recent month for the two games appears below:Claimjumper Makeover TotalSales ............................................ $30,000 $70,000 $100,000Variable expenses ...................... 20,000 50,000 70,000Contribution margin ..................... $10,000 $20,000 30,000Fixed expenses .......................... 24,000Net operating income .................. $ 6,000Required:1. Compute the overall contribution margin (CM) ratio for the company.2. Compute the overall break-even point for the company in sales dollars.3. Verify the overall break-even point for the company by constructing a contribution format incomestatement showing the appropriate levels of sales for the two products.Robeson Company estimates it will produce and sell 3,000 units next month. Data on costs follows: Per unit costs: Selling price…………………………………………………… $11.00 Variable manufacturing costs………………………………… $5.75 Variable selling costs…………………………………………. $0.25 Total costs: Fixed manufacturing costs…………………………………....... $4,500 Fixed selling costs……………………………………………... $ 500 Using the following example, identify AND calculate the two cost variances, AND the TOTAL DM Variance, associated with the example (Direct Materials Price Variance; Direct Materials Efficiency Variance). Standard costs for producing 1,000 units of a product are 1,600 pounds of material at $9.00 per pound. Actual costs for producing 1,000 units of the product were 1,500 pounds of material at $9.25 per pound.Refer to the data in Exercise 6–1 for Ida Sidha Karya Company. The absorption costing income statement prepared by the company’s accountant for last year appears as shown: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191,250Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,500Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,750Selling and administrative expense . . . . . . . . . . . . . 24,500Net operating income . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,250 Required:1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company’s inventory at the end of last year?2. Prepare an income statement for last year using variable costing. Explain the difference in net operating income between the two costing methods.
