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Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Contribution margin per skateboard 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Selling price Variable expense Amount per skateboard per skateboard

Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Contribution margin per skateboard 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Selling price Variable expense Amount per skateboard per skateboard

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating income. Contribution margin per skateboard Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Selling price Variable expense $ 2,325,000 1,395,000 930,000 744,000 186,000 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ Amount Number of skateboards per skateboard per skateboard 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) E
Transcribed Image Text:Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating income. Contribution margin per skateboard Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Selling price Variable expense $ 2,325,000 1,395,000 930,000 744,000 186,000 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ Amount Number of skateboards per skateboard per skateboard 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) E
1-d. Compute the degree of operating leverage at the level of sales that you computer Requirement (1c). Degree of operating leverage 2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3.00 per skateboard next year. If this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new break-even point in skateboards? (Do not round intermediate calculations.) Contribution margin Unit sales to break-even point Number of skateboards % 3. Refer to the data in Requirement (2) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $186,000, as in the most recent year? (Do not round intermediate calculations.) skateboards Selling price 4. Refer again to the data in Requirement (2) above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labour costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Transcribed Image Text:1-d. Compute the degree of operating leverage at the level of sales that you computer Requirement (1c). Degree of operating leverage 2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3.00 per skateboard next year. If this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new break-even point in skateboards? (Do not round intermediate calculations.) Contribution margin Unit sales to break-even point Number of skateboards % 3. Refer to the data in Requirement (2) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $186,000, as in the most recent year? (Do not round intermediate calculations.) skateboards Selling price 4. Refer again to the data in Requirement (2) above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labour costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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