Percent Per Unit of Sales Variable expenses) Selling price Contribution margin 5 130 78 5.52 100 Fixed expenses are $86,000 per month and the company is selling 2.800 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher components that increase the variable expense by S6 per unit and increase unit sales by 15% 2-b. Should the higher-quality components be used? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 2A Req 28 Refer to the original data. How much will net operating income increase (decrease) per month if the company quality components that increase the variable expense by $6 per unit and increase unit sales by 15%. uses higher-

Percent Per Unit of Sales Variable expenses) Selling price Contribution margin 5 130 78 5.52 100 Fixed expenses are $86,000 per month and the company is selling 2.800 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher components that increase the variable expense by S6 per unit and increase unit sales by 15% 2-b. Should the higher-quality components be used? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 2A Req 28 Refer to the original data. How much will net operating income increase (decrease) per month if the company quality components that increase the variable expense by $6 per unit and increase unit sales by 15%. uses higher-

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 56P: Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic...

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Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?
Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals 78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to earn operating income of 81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
If a company has fixed costs of $6.000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? A. 100 B. 180 C. 200 D. 2,000
Subject: cost accounting
PROBLEM 2. Outlast Company's projected profit for the coming year follows: Per Unit Total P200,000 (120,000) 80,000 (64,000) P 16,000 Sales P20 Less: Variable costs (12) Contribution margin Less Fixed expenses P 8 Income Requirements: 1. Compute the breakeven point in units. 2. How many units must be sold to earn a profit of P30,000? 3. Compute the additional profit that Outlast would eari sales were P25,000 more than expected.
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 130 78 $ 52 Percent of Sales 100% 60 40% Fixed expenses are $86,000 per month and the company is selling 2,800 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $6 per unit and increase unit sales by 15%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below.
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 70 49 $ 21 Fixed expenses are $74,000 per month and the company is selling 4,400 units per month. Req 2A 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used? Req 2B Percent of Sales Complete this question by entering your answers in the tabs below. 100% 70 30% by Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. Net operating income
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Fixed expenses are $74,000 per month and the company is selling 4,400 units per month. Req 2A Per Unit $ 70 49 $ 21 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the co pany uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used? Req 2B Percent of Sales Complete this question by entering your answers in the tabs below. 100% 70 30% increases by Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. Net operating income
v.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Lo... Break-Even Sales and Sales to Realize a Target Profit For the current year ending October 31, Papadakis Company expects fixed costs of $422,400, a unit variable cost of $46, and a unit selling price of $68. a. Compute the anticipated break-even sales (units). units. b. Compute the sales (units) required to realize a target profit of $96,800. units Check My Work Previous 6 Next Oct 26 6:18
Required Information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent Per Unit of sales $95 100% 57 60 $38 40% selling price variable expenses Contribution margin Fixed expenses are $79,000 per month and the company is selling 3,600 units per month. 2-a. Refer to the original data. How much will net operating Income Increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $3 per unit and increase unit sales by 10%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Req 2A Req 28 Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $3 per unit and increase unit sales by 10%. Net operating income by