Motorola's Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. Required: a. What is the contribution margin per phone? b. What is the breakeven point in phones? c. How many phones must be sold to earn pretax income of $7,500?

Motorola's Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. Required: a. What is the contribution margin per phone? b. What is the breakeven point in phones? c. How many phones must be sold to earn pretax income of $7,500?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Digital Displays Inc. makes computer monitors and sells them for $320 each. To break even, it needs…

A: The contribution margin is calculated as the difference between the sales and variable costs. The…

Q: Gladstorm Enterprises sells a product for $50 per unit. The variable cost is $34 per unit, while…

A: Lets understand the basics. Break even point is a point at which no profit no loss condition arise.…

Q: A product sells for $200 per unit and its variable costs per unit are $130. Total fixed costs are…

A: First, we calculate the contribution margin per unitContribution Margin per Unit = Selling Price per…

Q: am tubs per month. Each tub costs $10 in the market while the producer faces variable co tub. (a)…

A: Break even point production level is where there is no profit and no loss for Company.

Q: How do I work this problem using excel? Calculate the break even sales dollars if the fixed…

A: Break-even sales dollars = Fixed costs / contribution ratio

Q: Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells…

A: Cost volume profit analysis is the technique used by the management for decision-making. These…

Q: Barometers sell for $300 each. Variable costs are $200 per unit, fixed production costs are $2,000,…

A: Profit is the excess of revenue over cost. Profit can be found out by deducting cost price from…

Q: Jana's Company produces tie racks. The estimated fixed costs for the year are $288,000, and the…

A: Formula: Contribution margin ratio=Selling price per unit-Variable cost per unitSelling price per…

Q: Gladstorm Enterprises sells a product for $53 per unit. The variable cost is $36 per unit, while…

A: 1. CONTRIBUTION MARGIN : = SALES - VARIABLE COST 2. BREAKEVEN POINT IN SALES UNITS : = FIXED COST /…

Q: Coronado Industries produces hair brushes. The selling price is $15 per unit and the variable costs…

A: Break even point :— It is the point of production where total cost is equal to total revenue. At…

Q: ummer Company sells a product with a contribution margin ratio of 54%. Fixed costs per month are…

A: The break-even sales are the sales where the business earns no profit or loss during the period. The…

Q: Thai Two sells hot pots for $40 each. The company incurs monthly fixed costs of $5,000. The…

A: Contribution Margin Ratio = Selling Price per hot pot - Variable cost per hot pot / Selling Price…

Q: Swifty Corporation is planning to sell 810000 units for $1.50 per unit. The contribution margin…

A: Break-Even Sales: Sales volume required to cover the fixed and variable costs and left out with…

Q: Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is…

A: Break-even sales is the amount of sales where the net income is zero. Contribution margin is given…

Q: My Art sells framed art prints for $100. The unit variable cost per phone is $50 plus a selling…

A: BREAKEVEN POINTBreak Even means the volume of production or sales where there is no profit or…

Q: Gladstorm Enterprises sells a product for $60 per unit. The variable cost is $40 per unit, while…

A: Break even point in units = fixed costs/(selling price per unit - variable cost per unit)

Q: Gladstorm Enterprises sells a product for $50 per unit. The variable cost is $34 per unit, while…

A: Break even point means where there is no profit no loss. Variable cost means the cost which vary…

Q: mpany pr

A: the month, after that deducting the fixed cost (per moth get net income or loss for the month.) As…

Q: Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed…

A: Break-even point in units is computed by dividing the fixed cost by the contribution margin per…

Q: Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed…

A: The break even data can be calculated as per CVP analysis

Q: Gotcha Covered manufactures and sells leather cases for cell phones. Each case sells for $80.…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Luna Sea Sushi, Inc. has total costs of $130,000 when it sells 40,000 units. If total fixed costs…

A: Variable cost per unit can be calculated by dividing total variable cost by total units.

Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

Motorola's Cellular sells phones for $100. The unit variable cost per phone is $50
plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per
month, while fixed selling and administrative costs total $2,500.
Required:
a. What is the contribution margin per phone?
b. What is the breakeven point in phones?
c. How many phones must be sold to earn pretax income of $7,500?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

5. (A) Explain in detail the meaning of Contribution Margin. (B) Robeson Company expects to produce and sell 500 units next month. Data on costs foll Per unit costs: Selling price Variable manufacturing costs Variable selling costs $8.00 $2.75 $0.25 Total costs: Fixed manufacturing costs Fixed selling costs REQUIRED: $1,000 $ 125 What is the breakeven point in units? What is the breakeven point in sales dollars? What is the expected operating income for next month? What is the margin of safety in dollars? i. ii. iii. iv.
The variable cost to make a cellular device is $ 300 and the fixed costs are $ 1,400 per day. Decide: a) The equation of the total cost "y" of manufacturing "x" cell phones per day b) What is the cost of manufacturing 250 cell phones per day?
Your company manufactures bikes that sell for $10,000. Unit variable costs are $6,000 and totalmonthly fixed costs are $500,000. What is the number of units that must be producedand sold to earn a target income amount of $2,400,000?
Finley Corporation has monthly fixed costs of $67,000. It sells two products for which it has provided the following information. Contribution Sales Price Product 1 Product 2 $15 20 Margin $9 4 a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1 and 70 percent Product 2? (Hint: Determine the contribution margin ratio for each product.) (Round your answer to the nearest dollar amount.) b. What total monthly sales revenue is required to earn a monthly operating income of $16,000 if the relative sales mix is 20 perce for Product 1 and 80 percent for Product 2? (Round your answer to the nearest dollar amount.) Answer is complete but not entirely correct. a. Break even sales revenue $ 190,625 b. Target sales revenue $275,000 B