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 $1,202,000 for the year.Required:a. Compare the two companies' cost structures.b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profitsincrease?Complete this question by entering your answers in the tabs below.Required A Required B> Answer is complete but not entirely correct.Compare the two companies' cost structures.SalesVariable costContributionmarginFixed costsOperating profitDennis's Retail Mart'sAmount$ 1,202,000✔372,620 X$ 829,380 X72,120✔757,260 XPercentage100 %31 X %69 X %6✔ %63 X %$ 1,202,000✔828,380 X373,620 X552,920✔S (179,300) XISOakfield Convenience StoreAmount< Required APercentage100✔ %69 X %31 X %46✔ %(15) X %Required B >

Lets understand the basics..Contribution margin income statement is a statement which shows how much…

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

See similar textbooks

Similar questions

McDonald Inc. sells two products: a regular and a deluxe version. The owner, lain, would like to better understand the impact of the sales mix on the company's sales. The following information is available: Sales price per unit Variable cost per unit Regular $45 $27 Deluxe $80 $32 The company has total fixed costs of $540,000 for the year and they sell 3 Regular products for every 2 Deluxe products. lain would like to know, given the sales mix, how many units of each product the company must sell per year to break even. The company must sell www units of the Regular product. Enter the number of units given the current sales mix. units of the Deluxe product. The company must sell Enter the number of units given the current sales mix.
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?
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
Li Company has a unit selling price of $150, unit variable costs of $45, and total fixed costs of $47,200. How much sales revenue must Li Company generate to achieve net income of $27,700. Sales revenue needed to achieve target net income $
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 >
The following information relates to a. The following per-unit cost information relates to Product K of Magna Company, based on the maximum capacity of 40,000 units. Variable Manufacturing $ 30 Variable Selling 4 Fixed Manufacturing 12 Fixed Selling 7 Unit cost $ 53 Magna is expected to sell all of 40,000 units produced to its regular customers for a price of $80 per unit. Sonya has approached Magma to buy 10,000 units of Product K. If Magna sells to Sonya, variable selling costs will not be incurred. To Sonya, Magna has to charge at least per unit? Multiple Choice $80 $76 $26 $53 $30
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?
Use this information for Carter Co. to answer the question that follows. Carter Co. sells two products, arks and bins. Last year, Carter sold 14,000 units of arks and 56,000 units of bins. Related data are as follows: Product Unit Selling Price Unit Variable Cost Unit Contribution Margin Arks Bins $120 80 $80 60 $40 20 Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in sales units? a. 12,000 units O b. 28.000 units O c. 35,000 units O d. 40.000 units 13
Simmons Corp. has a selling price of $11, variable costs of $2 per unit, and fixed costs of $24,852. Simmons net income is $44,370. How many units did Simmons sell? Round your units to nearest whole number
Response containing written narrative, figures, and charts. 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. 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. If the company uses the new…

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS