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May 5, 2023 at 1:17 AM The Variable Expense Ratio The variable expense ratio is the ratio of variable expenses to sales. It can be computed by dividing the total variable expenses by the total sales, or in a single product analysis, it can be computed by dividing the variable expenses per unit by the unit selling price. Racing Bicycle Company Contribution Income Statement For the Month of June Total $ Sales (500 bicycles) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating income $ Per Unit 250,000 $ 500 150,000 300 100,000 $ 200 80,000 20,000 CM Ratio 100% 60% 40% Change in Variable Costs and Sales Volume What is the profit impact if Racing Bicycle can use higher quality raw materials, thus increasing variable costs per unit by $20, to generate an increase in unit sales from 500 to 880? Change in Fixed Cost, Sales Price, and Volume

May 5, 2023 at 1:17 AM The Variable Expense Ratio The variable expense ratio is the ratio of variable expenses to sales. It can be computed by dividing the total variable expenses by the total sales, or in a single product analysis, it can be computed by dividing the variable expenses per unit by the unit selling price. Racing Bicycle Company Contribution Income Statement For the Month of June Total $ Sales (500 bicycles) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating income $ Per Unit 250,000 $ 500 150,000 300 100,000 $ 200 80,000 20,000 CM Ratio 100% 60% 40% Change in Variable Costs and Sales Volume What is the profit impact if Racing Bicycle can use higher quality raw materials, thus increasing variable costs per unit by $20, to generate an increase in unit sales from 500 to 880? Change in Fixed Cost, Sales Price, and Volume

FINANCIAL ACCOUNTING
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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May 5, 2023 at 1:17 AM The Variable Expense Ratio The variable expense ratio is the ratio of variable expenses to sales. It can be computed by dividing the total variable expenses by the total sales, or in a single product analysis, it can be computed by dividing the variable expenses per unit by the unit selling price. Racing Bicycle Company Contribution Income Statement For the Month of June Total Sales (500 bicycles) Less: Variable expenses Contribution margin. Less: Fixed expenses Net operating income $ $ Per Unit 250,000 $ 500 150,000 100,000 80,000 20,000 300 $ 200 CM Ratio 100% 60% 40% Change in Variable Costs and Sales Volume What is the profit impact if Racing Bicycle can use higher quality raw materials, thus increasing variable costs per unit by $20, to generate an increase in unit sales from 500 to 880? Change in Fixed Cost, Sales Price, and Volume What is the profit impact if RBC: (1) cuts its selling price $20 per unit, (2) increases its advertising budget by $20,000 per month, and (3) increases sales from 500 to 850 units per month?
Transcribed Image Text:May 5, 2023 at 1:17 AM The Variable Expense Ratio The variable expense ratio is the ratio of variable expenses to sales. It can be computed by dividing the total variable expenses by the total sales, or in a single product analysis, it can be computed by dividing the variable expenses per unit by the unit selling price. Racing Bicycle Company Contribution Income Statement For the Month of June Total Sales (500 bicycles) Less: Variable expenses Contribution margin. Less: Fixed expenses Net operating income $ $ Per Unit 250,000 $ 500 150,000 100,000 80,000 20,000 300 $ 200 CM Ratio 100% 60% 40% Change in Variable Costs and Sales Volume What is the profit impact if Racing Bicycle can use higher quality raw materials, thus increasing variable costs per unit by $20, to generate an increase in unit sales from 500 to 880? Change in Fixed Cost, Sales Price, and Volume What is the profit impact if RBC: (1) cuts its selling price $20 per unit, (2) increases its advertising budget by $20,000 per month, and (3) increases sales from 500 to 850 units per month?
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