The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.31 and fixed costs of$72,120. Every dollar of sales contributes 31 cents toward fixed costs and profit. The cost structure of a competitor, OakfieldConvenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.69 and fixed costs of $552,920. Everydollar of sales contributes 69 cents toward fixed costs and profit. Both companies have sales of $1,202,000 for the year.Required:a. Compare the two companies' cost structures.b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profitsincrease?Complete this question by entering your answers in the tabs below.Required A Required BAnswer is complete but not entirely correct.Compare the two companies' cost structures.SalesVariable costContributionmarginFixed costsOperating profitDennis's Retail Mart'sAmount$ 1,202,000372,620$ 829,38072,120$ 757,260 xPercentage10031 X %69 X %6 %63 X %% $ 1,202,000828,380373,620552,920$ (179,300) X$Oakfield Convenience StoreAmount< Required APercentage1006931 X %%46(15) X%Required B >%

A. Dennis's Retail MartOakfield Convenience StoreParticularAmountPercentageAmountPercentageSales $…

Answered: The cost structure of Dennis's Retail…

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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Artis Sales has two store locations. Store A has fixed costs of $205, 000 per month and a variable cost ratio of 55%. Store B has fixed costs of $ 380,000 per month and a variable cost ratio of 30 % . At what sales volume would the two stores have equal profits or losses?
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: Product Units Sold Sales Mix A 18,320 80% B 4,580 20 Total 22,900 100% Assume the following unit selling prices and unit variable costs: Product Selling Price Variable Cost Contribution Margin A $ 90 $ 75 $ 15 B 150 110 40 Fixed costs are $420,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales volume changes. --Assume the original facts except that now fixed costs are expected to be $42,000 higher than originally planned. How does this expected increase in fixed costs affect the breakeven point in units? How does…
Furillo Furriers has a contribution margin ratio of 80 percent and must sell 12,000 stoles at a unit price of $400 to break even I Compute total fixed costs. a. Compute variable cost per unit b. Develop the company's cost formula.
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Jaybird Company operates in a highly competitive market where the market price for its product is $145 per unit. Jaybird desires a 30% profit per unit. Jaybird expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials S 24 Overhead $ 45,000 Direct labor 25 General and administrative 18,000 Overhead 23 General and administrative 29 To achieve the target cost per unit, Jaybird must reduce total expenses by how much? Multiple Choice $ 62,000 $51,000 $70, 500 $67,500 $60, 500
[The following information applies to the questions displayed below.] Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 44,000 units of each product. Income statements for each product follow. Sales Variable costs Contribution margin Fixed costs Income 3. Assume that the company expects sales of each product to increase to 58,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.) Contribution margin Income (loss) Carvings $ 774,400 464, 640 309,760 Mementos $ 774,400 154,880 619,520 187,760 497,520 $ 122,000 $ 122,000 HENNA COMPANY Contribution Margin Income Statement Carvings Units $ Per unit Total Mementos $ Per unit Total Total
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Milano Co. manufactures and sells three products: product 1, product 2, and product 3. Their unit selling prices are product 1, $40; product 2, $30; and product 3, $20. The per unit variable costs to manufacture and sell these products are product 1, $30; product 2, $15; and product 3, $8. Their sales mix is reflected in a ratio of 6:4:2. Annual fixed costs shared by all three products are $270,000. One type of raw material has been used to manufacture products 1 and 2. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: product 1 by $10 and product 2 by $5. However, the new material requires new equipment, which will increase annual fixed costs by $50,000. Required 1. If the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. 2. If the company uses the new material, determine its new break-even point in both…
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