What is the contribution margin ratio? Super-Tees Company plans to sell 10,000 T-shirts at $18 each inthe coming year. Product costs include:Direct materials per T-shirt - $6.30Direct labor per T-shirt - $1.26Variable overhead per T-shirt - $0.54Total fixed factory overhead - $38,000Variable selling expense is the redemption of a coupon, whichaverages $0.90 per T-shirt; fixed selling and administrativeexpenses total $11,000.Calculate the contribution margin ratio.

Step 1: Define Contribution Margin RatioThe contribution margin ratio is a percentage that…

Answered: Super-Tees Company plans to sell 10,000…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1CE

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Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.
Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costsinclude: Direct materials per T-shirt $5.75Direct labor per T-shirt $1.25Variable overhead per T-shirt $0.60Total fixed factory overhead $43,000 Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.Required:1. Calculate the:a. Variable product cost per unitb. Total variable cost per unitc. Contribution margin per unitd. Contribution margin ratio (rounded to four significant digits)e. Total fixed expense for the year2. Prepare a contribution-margin-based income statement for Super-Tees Company for thecoming year.3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new valuesfor the following:a. Variable product cost per unitb. Total variable cost per unitc. Contribution margin per unitd. Contribution margin ratio (rounded to four…
Pam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include: Direct materials per T-shirt $4.75 Direct labour per T—shirt $2.25 Variable overhead per T- shirt $0.50 Total fixed factory overhead $32,000 Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; ﬁxed selling and administrative expenses total $17,000. Required: Calculate the: 1. Variable product cost per unit 2. Contribution margin ratio (rounded to four signiﬁcant digits) 3. Total ﬁxed expense for the year 4. Break Even point in quantity (Q) 5. Margin of Safety in Quantity (Q)
Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow: Selling price per unit P35 Manufacturing cost P4,000 per month plus P17 per unit Administrative expense P2,500 per month plus P2.50 per unit Sales commissions 15% of sales Advertising expense P2,000 per month If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be:
Micol & Co. Ltd sells a single product, baby hamper, with a selling price of $150 and variable costs per baby hamper of $100. The company’s monthly fixed expenses are $200,000. required: 1: How many baby hampers will Micol & Co. Ltd need to sell (in sales dollars) in order to realize a target profit of $500,000? 2: Construct a contribution margin income statement for the first month (in July) that reflects $2,400,000 in sales revenue for Micol & Co. Ltd. 3) Provide two suggestions to Micol & Co. Ltd on how it can increase profit in subsequent months?
Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variablecost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed costequals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required:1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900by using the point in sales equation.2. Check your answer by preparing a contribution margin income statement based on thesales dollars calculated in Requirement 1.Brief Exercise 7-30 Break-Even Point in U
Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 71% is cost of goods sold, while the remaining 29% relates to variable operating expenses. The company sells each carton of calendars for $13.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Variable expenses Sales revenue ... The breakeven sales is 106,500 cartons. Fixed expenses Using the basic income statement equation you determined above solve for the number of cartons to break even. = Operating income Requirement 2. Compute the dollar amount of monthly sales Team Spirit Calendars needs in order to earn $304,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income ( (Round the contribution…
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