-18. Contribution Margin ConceptsDiPinto Electric Guitars & Basses sells musical instruments in Philadelphia. Assume the follow-ing information comes from the company's prior year records.Chapter 15 Cost-Volume-Profit Analysis andFixedSales.VariableTotalCostsGoods sold.$800,000Labor.$346,000SuppliesUtilities$180,00040,00010,0009,00048,0004,000Rent5,000Advertising10,00010,000Miscellaneous.5,000Total costs.$267,000$400,000(667,000)Net income.$133,000REQUIREDa.Determine the annual break-even dollar sales volume.b. Determine the current margin of safety in dollars.C. Prepare a cost-volume-profit graph for the guitar shop. Label both axes in dollars with maxi-mum values of $1,000,000. Draw a vertical line on the graph for the current ($800,000) saleslevel, and label total variable costs, total fixed costs, and total profits at $800,000 sales.". What is the annual break-even dollar sales volume if management makes a decision that in-creases fixed costs by $50,000?

Cost Volume Profit is a study in cost accounting to meet the net profit goals of a manufacturing entity. The factors affecting net income are; Sales Price Variable Cost Fixed Cost Sales VolumeBreak Even Sales =Total Fixed CostsTotal Revenue-Total Variable costs×Total Revenue=$267,000$800,000-$400,000×$800,000=$267,000$400,000×$800,000=$534,000Margin of safety=Current Sales-Break Even Sales=$800,000-$534,000=$266,000

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REQUIRED a. Determine the annual break-even dollar sales volume. b. Determine the current margin of safety in dollars. - Prepare a cost-volume-profit graph for the guitar shop. Label both axes in dollars with maxi- mum values of $1,000.000. Draw a vertical line on the graph for the current ($800,000) sales level and Inhol total variable costs, total fixed costs, and total profits at $800,000 sales. thot in

REQUIRED a. Determine the annual break-even dollar sales volume. b. Determine the current margin of safety in dollars. - Prepare a cost-volume-profit graph for the guitar shop. Label both axes in dollars with maxi- mum values of $1,000.000. Draw a vertical line on the graph for the current ($800,000) sales level and Inhol total variable costs, total fixed costs, and total profits at $800,000 sales. thot in

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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