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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Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a + bX. 2. In the first…
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.
Wren Co. manufactures and sells two products with selling prices and variable costs as follows: A) selling price $18.00, variable costs $12.00, and B) selling price $22.00, variable costs $14.00. Wren's total annual fixed costs are $38,400. Wren sells four units of A for every unit of B. If operating income was $28,800 what was the number of units Wren sold?
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
Handy Home sells windows (60% of sales) and doors (40% of sales). The selling price of each window is $220 and of each door is $540. The variable cost of each window is $135 and of each door is $370. Fixed costs are $600,950. S (1) Compute the weighted-average contribution margin. Sales mix Windows Doors Contribution margin (2) Compute the break-even point in units using the weighted-average contribution margin. Numerator: Denominator: 7 Windows Doors Total Weighted-average contribution margin (3) Compute the number of units of each product that will be sold at the break-even point. Sales mix Number of units to break even. = Total per unit Break Even Units Break Even Units Unit sales at break-even point
Fresh Co. is a company that produces fruit juices. Variable Manufacturing Costs of one package of juice = $0.6, Variable Marketing and Administrative Cost = $0.4, Fixed Costs = $12,000, Sales Price per unit is $4. Which of the following is Fresh Co.’s Target Volume (in Sales dollars)? a) $12,000 b) $13,320 c)$16,000 d) $14,120
Finch Corporation produces products that it sells for $20 each. Variable costs per unit are $5, and annual fixed costs are $318,000. Finch desires to earn a profit of $51,000. Required a. Use the equation method to determine the break-even point in units and dollars. b. Determine the sales volume in units and dollars required to earn the desired profit. a. Break-even point in units a. Break-even point in dollars b. Sales volume in units b. Sales in dollars Prev 1 of 16 Next >
Couzen's Company’s cost structure is dominated by variable costs with a contribution margin ratio of 0.27 and fixed costs of $513,000. Every dollar of sales contributes 27 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is dominated by fixed costs with a higher contribution margin ratio of 0.77 and fixed costs of $2,650,500. Every dollar of sales contributes 77 cents toward fixed costs and profit. Both companies have sales of $4,275,000 annually. Required: Compare the two companies’ cost structures. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company’s profits decrease?
RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The sales level in units to achieve the desire profit is Show Transcribed Text n A company that sells multiple types of products has a selling price per composite unit of $150, variable cost per composite unit of $50 and total fixed costs of $25,000. The contribution margin per composite unit is S

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