Question 1 A company produces a single product called the Fidget. The following information relating to the next year has been provided: 1,200,000 840,000 360,000 300,000 Sales Less Variable expenses Contribution margin Less Fixed expenses 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% e. Calculate the margin of safety ratio f. Using an excel sheet, prepare the breakeven chart assuming that the company sells 15,000 units
Question 1 A company produces a single product called the Fidget. The following information relating to the next year has been provided: 1,200,000 840,000 360,000 300,000 Sales Less Variable expenses Contribution margin Less Fixed expenses 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% e. Calculate the margin of safety ratio f. Using an excel sheet, prepare the breakeven chart assuming that the company sells 15,000 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PLEASE ANSWER QUESTIONS D, E & F
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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