Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating thecompany are $150,000 per month, and the variable costs for caps are $5 per unit. The caps are sold for $8per unit. The fixed costs provide a production capacity of up to 100,000 caps per month.Required1. Use the formulas in the chapter to compute the following:a. Contribution margin per cap.b. Break-even point in terms of the number of caps produced and sold.c. Amount of net income at 30,000 caps sold per month (ignore taxes).d. Amount of net income at 85,000 caps sold per month (ignore taxes).2. Use the formulas in the chapter to compute thea. Contribution margin ratio.b. Break-even point in terms of sales dollars.c. Amount of net income at $600,000 of sales per month (ignore taxes).e. Dollars of sales needed to provide $45,000 of profit.Answer

Contribution margin is the amount which is left after deducting the variable costs from the sales…

Answered: Sport Caps Co. manufactures and sells…

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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