Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
PLEASE ANSWER ONLY QUESTIONS
F AND G
![Question 1
A company produces a single product called the Fidget. The following information relating to the next
year has been provided:
1,200,000
840,000
360,000
Sales
Less Variable expenses
Contribution margin
Less Fixed expenses
300,000
Net operating income
60,000
The company plans to sell 15,000 next year
Required:
a.
Calculate the contribution margin per unit and the contribution margin ratio
b.
Compute the breakeven point in units and dollar value
C.
Compute the number of units to be sold in order to earn a profit of $36,000
d.
Calculate the sales value required to earn a profit of $36,000 if the tax rate is 25%
Calculate the margin of safety ratio
Using an excel sheet, prepare the breakeven chart assuming that the company sells
e.
f.
15,000 units
g.
State two (2) assumptions of CVP analysis](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbbc9030d-437f-4c08-994a-0d96ec4c5e10%2Fdef2eac1-2aac-4910-83b7-032009d30bff%2Faxb87jl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 1
A company produces a single product called the Fidget. The following information relating to the next
year has been provided:
1,200,000
840,000
360,000
Sales
Less Variable expenses
Contribution margin
Less Fixed expenses
300,000
Net operating income
60,000
The company plans to sell 15,000 next year
Required:
a.
Calculate the contribution margin per unit and the contribution margin ratio
b.
Compute the breakeven point in units and dollar value
C.
Compute the number of units to be sold in order to earn a profit of $36,000
d.
Calculate the sales value required to earn a profit of $36,000 if the tax rate is 25%
Calculate the margin of safety ratio
Using an excel sheet, prepare the breakeven chart assuming that the company sells
e.
f.
15,000 units
g.
State two (2) assumptions of CVP analysis
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