QUESTION : T&H Manufacturing Company produces and a single product. Its current sales are $500,000. The company's accountant provided the following information: Selling price per unit Manufacturing costs Selling costs $40.00 $100,000+ 40% sales $30,000 + 10% sales $45,000 + 10% sales Administrative costs Required: 1. Compute the product's contribution margin ratio. 2. Compute the company's current net income. 3. Compute the product's break-even point in dollars and units. 4. Compute the amount of revenue necessary to earn $60,000 in profit. 5. Compute the unit contribution margin. 6. Compute the company's current margin of safety ratio. 7. Should the company accept a proposal that increases sales by 20% and total fixed costs by 25%?
QUESTION : T&H Manufacturing Company produces and a single product. Its current sales are $500,000. The company's accountant provided the following information: Selling price per unit Manufacturing costs Selling costs $40.00 $100,000+ 40% sales $30,000 + 10% sales $45,000 + 10% sales Administrative costs Required: 1. Compute the product's contribution margin ratio. 2. Compute the company's current net income. 3. Compute the product's break-even point in dollars and units. 4. Compute the amount of revenue necessary to earn $60,000 in profit. 5. Compute the unit contribution margin. 6. Compute the company's current margin of safety ratio. 7. Should the company accept a proposal that increases sales by 20% and total fixed costs by 25%?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:QUESTION : T&H Manufacturing Company produces and a single product. Its
current sales are $500,000. The company's accountant provided the following
information:
Selling price per unit
Manufacturing costs
Selling costs
Administrative costs
Required:
1. Compute the product's contribution margin ratio.
2. Compute the company's current net income.
3. Compute the product's break-even point in dollars and units.
4. Compute the amount of revenue necessary to earn $60,000 in profit.
5. Compute the unit contribution margin.
6. Compute the company's current margin of safety ratio.
7. Should the company accept a proposal that increases sales by 20% and total
fixed costs by 25%?
$40.00
$100,000+ 40% sales
$30,000 + 10% sales
$45,000 + 10% sales
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