The controller of Pelly Corporation prepared the following projected incomestatement:Sales - $95,000Total variable cost $68,400Contribution margin - $26,600Total fixed cost - $14,000Operating Income - $12,600A) Calculate the contribution margin ratio.B) Calculate the variable cost ratio.C) Calculate the break-even sales revenue for Pelly.

A) Calculation of the contribution margin ratio: Contribution margin ratio = (Contribution margin /…

Answered: The controller of Pelly Corporation…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

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The controller of Ashton Company prepared the following projected income statement: Sales $97,000 Total variable cost 32,850 Total fixed cost 43,800 Operating income $20,440 Required: Calculate the contribution margin ratio?
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APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company's product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a per-unit basis.…
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The accountant for PNW, LLC has prepared a contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) Variable expenses Contribution margin Fixed expenses $540,000 405,000 135,000 130,500 Net operating income $ 4,500 Assuming that the information provided is within the relevant range, the contribution margin ratio is closest to:
Zachia Ltd provides the following data regarding its four product lines: Product Sales mix Weighted average contribution margin per unit (WACMU) Fixed costs Desired profit after tax w Y 60 20 15 $13.7 $71,000 $33,950 The corporate tax rate is 30% Required Calculate the number of units of Product X that must be sold in order to achieve the desired after-tax profit?
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Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Ashton Company prepared the following projected income statement: Sales $88,000 Total Variable cost 69,520 Contribution margin $18,480 Total Fixed cost 9,030 Operating income $9,450 Required: 1. Calculate the contribution margin ratio. % 2. Calculate the variable cost ratio. % 3. Calculate the break-even sales revenue for Ashton. $ 4. How could Ashton increase projected operating income without increasing the total sales revenue?
Jellico Inc.’s projected operating income (based on sales of 450,000 units) for the coming year isas follows:TotalSales $11,700,000Total variable cost 8,190,000Contribution margin $ 3,510,000Total fixed cost 2,254,200Operating income $ 1,255,800Required:1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars.2. How many units must be sold to earn operating income of $296,400?3. Compute the additional operating income that Jellico would earn if sales were $50,000 morethan expected.4. For the projected level of sales, compute the margin of safety in units, and then in salesdollars.5. Compute the degree of operating leverage. (Note: Round answer to two decimal places.)6. Compute the new operating income if sales are 10% higher than expected.
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.)
Given the following information, find dollar sales: a. Fixed costs, $60,000; profit, $18,000; sales price per unit, $8.00; variable cost per unit, $5.00 b. Variable rate, .45; profit, $21,578.10; fixed costs, $58,382 c. Sales price per unit, $16.60; profit, $21,220; contribution margin, $9.29; fixed costs, $126,000

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