Contribution Margin, CVP, Net Income, Margin of Safety Nail Glow, Inc., produces novelty nail polishes. Each bottle sells for $5.90. Variable unit costs are as follows: Acrylic base $0.86 Bottle, packing material $1.15 Pigments 0.57 Selling commission 0.14 Other ingredients 0.43 Fixed overhead costs are $34,475 per year. Fixed selling and administrative costs are $6,720 per year. Nail Glow sold 35,000 bottles last year. Required: 1. What is the contribution margin per unit for a bottle of nail polish? Round your answer to the nearest cent. $fill in the blank 1 per unit What is the contribution margin ratio? Round your answer to four decimal places. Use the rounded value in the subsequent computations. (Express as a decimal-based amount rather than a whole percent.) fill in the blank 2 2. How many bottles must be sold to break even? fill in the blank 3 bottles What is the break-even sales revenue? Round your answer to the nearest dollar, if rounding is required. Use the rounded value in the subsequent computations. $fill in the blank 4 3. What was Nail Glow's operating income last year? $fill in the blank 5 4. What was the margin of safety in revenue? $fill in the blank 6 5. Suppose that Nail Glow, Inc., raises the price to $6.50 per bottle, but anticipated sales will drop to 28,750 bottles. What will the new break-even point in units be? Round your answer to the nearest whole number of units. fill in the blank 7 bottles Should Nail Glow raise the price?
Contribution Margin, CVP, Net Income, Margin of Safety
Nail Glow, Inc., produces novelty nail polishes. Each bottle sells for $5.90. Variable unit costs are as follows:
| Acrylic base | $0.86 | Bottle, packing material | $1.15 | |||
| Pigments | 0.57 | Selling commission | 0.14 | |||
| Other ingredients | 0.43 |
Fixed
Required:
1. What is the contribution margin per unit for a bottle of nail polish? Round your answer to the nearest cent.
$fill in the blank 1 per unit
What is the contribution margin ratio? Round your answer to four decimal places. Use the rounded value in the subsequent computations. (Express as a decimal-based amount rather than a whole percent.)
fill in the blank 2
2. How many bottles must be sold to break even?
fill in the blank 3 bottles
What is the break-even sales revenue? Round your answer to the nearest dollar, if rounding is required. Use the rounded value in the subsequent computations.
$fill in the blank 4
3. What was Nail Glow's operating income last year?
$fill in the blank 5
4. What was the margin of safety in revenue?
$fill in the blank 6
5. Suppose that Nail Glow, Inc., raises the price to $6.50 per bottle, but anticipated sales will drop to 28,750 bottles. What will the new break-even point in units be? Round your answer to the nearest whole number of units.
fill in the blank 7 bottles
Should Nail Glow raise the price?
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