Ronald Medical Supply is a retailer of home medical equipment. Last year, Ronald's sales revenues totaled $6,100,000. Total expenses were $2,590,000. Of this amount, approximately $1,342,000 were variable,while the remainder were fixed. Since Ronald's offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units.Read the requirements.Requirement 1. What is Ronald's current operating income?Begin by identifying the formula to compute the operating income.RequirementsGOperating incomePrint1. What is Ronald's current operating income?2. What is Ronald's contribution margin ratio?3. What is the company's breakeven point in sales dollars? (Hint: The contributionmargin ratio calculated in Requirement 2 is already weighted by the company'sactual sales mix.)- X4. Ronald's top management is deciding whether to embark on a $230,000advertising campaign. The marketing firm has projected annual sales volume toincrease by 20% as a result of this campaign. Assuming that the projectionsare correct, what effect would this advertising campaign have on the company'sannual operating income?Done

Break even point is the optimum point of No profit no loss as at this point the firm is earning zero…

Answered: Ronald Medical Supply is a retailer of…

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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Ullie Medical Supply is a retailer of home medical equipment. Last year, Ullie's sales revenues totaled $6,600,000. Total expenses were $2,300,000. Of this amount, approximately $1,320,000 were variable, while the remainder were fixed. Since Ullie's offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units. 4.(PLEASE SOLVE THIS QUESTION) Ullie's top management is deciding whether to embark on a $180,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 18% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income? What effect would this advertising campaign have on Ullie's annual operating income? The effect would be (INCREASE/DECREASE) operating income of
i only need the breakeven point in req.3 please.
Please answer the three questions below. Thanks! 1) Gilley, Inc., sells a single product. The company's most recent income statement is given below. Sales (4,000 units)- Variable Expenses Contribution Margin- Fixed ExpensesOperating Income $ 120,000(68,000)$ 52,000(42,000)$ 10,000 If 10 more units are sold, profits will increase by: 2) Using the information from Gilley, Inc. above, answer the following. The marketing manager believes that sales may increase next year by 20%. Using the operating leverage and the predicted increase in sales, what will TOTAL operating income be next year if the marketing manager is correct? 3) Using the information from Gilley, Inc. above, answer the following. The CEO of Gilley believes that sales will increase to 5,000 units next year and thinks that this may be a good time to lower variable cost and increase fixed costs through some minor automation in the plant. If they go ahead with this plan, variable costs per unit will…
a) Calculate the contribution margin per unit.b) Calculate the number of units Beauty Supplies Company must sell each year to break even.c) Calculate the number of units Beauty Supplies Company must sell to yield a profit of $160,000.d) Managers may use Sensitivity analysis in their accounting system.i) What is sensitivity analysis? ii) How is Sensitivity analysis useful to managers?
Flair ranks the individual customers in the Ma and Pa single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $58,120. Best Drugs reports operating losses of $23,670 for the bottom 40% of its customers. Make four recommendations that you think Best Drugs should consider in light of this new customer-profitability information.
I have found the variable portion (51.9%) but don't understand how to get the fixed portion in dollars.Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year’s operations (revenues and costs in thousands of dollars). Store Revenues Costs 101 $4,100 $4,214 102 2,227 2,894 103 5,738 5,181 104 3,982 3,998 105 2,914 3,676 106 4,023 3,319 107 6,894 5,029 108 1,779 2,374 109 5,416 4,688 110 3,228 2,959 111 3,886 4,179 112 4,690 3,200 113 3,552 2,556 114 4,817 4,655 115 2,124 2,986 Required: a. Use the high-low method to estimate the fixed and variable portions of store costs based on revenues. (Round variable cost percentage answer to 1 decimal…
Mauro Products distributes a single product, a woven basket whose selling price is $27 per unit and whose variable expense is $21 per unit. The company’s monthly fixed expense is $16,200. Can you please help me solve the following items: A. Calculate the company’s break-even point in unit sales. B. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.) C. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Windows is a small company that installs windows. Its cost structure is as follows: LOADING... (Click the icon to view the cost structure.) Traylor Windows' breakeven revenues is $1,870,000 and breakeven units is 3,400. Calculate the margin of safety in units and dollars and the margin of safety percentage if Traylor Windows expects to sell 3,600 windows in the year. Begin with calculating the margin of safety in dollars. Determine the formula to calculate the margin of safety in dollars. Then, enter the amounts and calculate the margin of safety in dollars. Budgeted revenue - Breakeven revenue = Margin of safety in dollars - = Next, determine the formula, enter the amounts, and calculate the margin of safety in units. Budgeted units - Breakeven units = Margin of safety in units - = Finally, calculate the margin of safety percentage if…
Need step by step explanation.Mauro Products distributes a single product, a woven basket whose selling price is $14 per unit and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,600. Required: Calculate the company’s break-even point in unit sales. Calculate the company’s break-even point in dollar sales. (Do not round intermediate calculations.) If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Mauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $16 per unit. The company's monthly fixed expense is $16,200. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales 3. Break-even point in dollar sales baskets baskets
FRANCORP is a large retailer of automobiles floor mats. An income statement for the most recent quarter is presented below: Sales $927,500Less Cost of Goods Sold 275,000Gross Marign 652,500Less Operating Expenses:Selling Expenses 205,500Administrative Expenses 280,000 485,500Net Income 167,000 The liners sell, on average, for $350 each. The department's variable selling expenses are $35 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 35% variable and 65% fixed. The company purchases its floor mats from a supplier at a cost of $125 per mat. Cost of Goods Sold is 50% variable. Determine the total fixed costs. a) $350,750b) $432, 250c) $410,000d) $315,700
FRANCORP is a large retailer of automobiles floor mats. An income statement for the most recent quarter is presented below: Sales $927,500Less Cost of Goods Sold 275,000Gross Marign 652,500Less Operating Expenses:Selling Expenses 205,500Administrative Expenses 280,000 485,500Net Income 167,000 The liners sell, on average, for $350 each. The department's variable selling expenses are $35 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 35% variable and 65% fixed. The company purchases its floor mats from a supplier at a cost of $125 per mat. Cost of Goods Sold is 50% variable. Determine the total variable cost per unit. a) $123.87b) $137.81c) $145.08d) $153.99

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