Answer:
$616,061
Explanation:
The computation of the break even sales is shown below:
As we know that
Break even point = (Fixed expenses) ÷ (Profit volume Ratio)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $22 - $12
= $10
And, Profit volume ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100
So, the Profit volume ratio = (10) ÷ (22) × 100 = 45.45%
And, the fixed expenses is $280,000
Now put these values to the above formula
So, the value would equal to
= ($280,000) ÷ (45.45%)
= $616,061
The annual payment on a house is $18,000. If payments are made for 40years, how much is the house worth assuming
Answer:
The answer is $2,785,715.38
Explanation:
Annual payment(PMT) is $18,000. This periodic payment is called an annuity.
Number of years(N) for the payment is 40 years
Interest rate is 6%
So how much does the house worth after 40 years?
Using a Financial calculator:
N = 40; I/Y = 6; PMT = 18,000 CPT FV =2,785,715.38
After 40 years, the house will worth $2,785,715.38
Wildhorse Company established a petty cash fund on May 1, cashing a check for $125. The company reimbursed the fund on June 1 and July 1 with the following results. June 1: Cash in fund $3.55. Receipts: delivery expense $27.45, postage expense $36.25, and miscellaneous expense $55.60. July 1: Cash in fund $4.15. Receipts: delivery expense $18.90, entertainment expense $52.25, and miscellaneous expense $49.70. On July 10, Wildhorse increased the fund from $125 to $155. Prepare journal entries for Wildhorse Company.
Answer:
journal entries for Wildhorse Company are given below
Explanation:
Wildhorse Company established a petty cash fund on May 1,
DEBIT CREDIT
Petty cash $125
Cash $125
The company reimbursed the fund on June 1
DEBIT CREDIT
delivery expense $27.45
postage expense $36.25
miscellaneous expense $55.60
Cash under/over $2.15
Cash ($125-$3.55) $121.45
The company reimbursed the fund on July 1
DEBIT CREDIT
delivery expense $18.90
entertainment expense $52.25
miscellaneous expense $49.70
Cash ($125 - 4.15) $120.85
Wildhorse increased the fund from $125 to $155
DEBIT CREDIT
Petty cash $30
Cash $30
Le Sun's has sales of $3,000, total assets of $2,500, and a profit margin of 5%. The firm has an equity multiplier of 2.5. What is the return on equity?
Answer:
Le Sun's return on equity is 15%
Explanation:
Assets turnover ratio = Net sales / Total fixed assets = $3,000 / $2,500 = 1.2 times
Return on Asset = Profit margin * Total assets turnover
ROA= 5% * 1.2 times
ROA = 6%
Return on Equity= ROA * Equity multiplier
ROE= 6% * 2.5
ROE= 15%
Le Sun's return on equity is 15%
Corporate finance (Financial management) deals with main three types of managerial decision making problems in the context of business except:
Answer:
staffing decision making problems
Explanation:
In simple words, corporate finance relates to the branch of finance that studies how and when an organisation and individuals should incest their money in the market.
In this subject matter. the analyst takes into consideration various market factors such as interest rates, GDP etc. and by applying various tools and methods make a decision.
It particularly deals with investment decisions and asset management problems and not staffing decisions.
Assuming that ATCHULO Company Ltd is committed to the current design, how would you improve it?
Answer:
Atchulo company should focus on its income centers rather than the whole organization. The company has limited itself to only domestic shipments. It has not considered the international shipment where profit margin can be high and company can benefit from expanding its operations. Also all the cost related to the travelling of shipment to and from the hub is charged to the hub and terminals does not bears the cost.
Explanation:
The revenue for the different terminals and hub is divided so the cost should also be allocated to the respective activities. If the hub is set as cost bearing center then there will no profit to the hub and terminals cost will be reduced and they will enjoy high profit.
A manufacturer reports the following information below for its first three years in operation.
Year 1 Year 2 Year 3
Income under variable costing $76,000 $109,000 $115,000
Beginning inventory (units) 0 800 500
Ending inventory (units) 800 500 0
Fixed manufacturing overhead per unit $8.00 $8.00 $8.00
Income for year 3 using absorption costing is:
a. $109,000
b. $117,000
c. $106,600
d. $115,000
e. $111,000
Answer:
e. $111,000
Explanation:
Absorption costing income for year 3 = Income under variable costing - {Beginning inventory (units) * Fixed manufacturing overhead per unit} + {Ending inventory (units) * Fixed manufacturing overhead per unit}
Absorption costing income for year 3 = 115,000 - (500*8) + (0*8)
= 115,000 - 4,000 + 0
= $111,000
Fasheh Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.50 Direct labor $ 3.90 Variable manufacturing overhead $ 1.30 Fixed manufacturing overhead $ 13.50 Fixed selling expense $ 2.25 Fixed administrative expense $ 1.80 Sales commissions $ 0.50 Variable administrative expense $ 0.45 If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:
Answer:
$134,500
Explanation:
Total manufacturing overhead = Variable overhead + Fixed overhead
Variable overhead= $1.3 * 10,000 units= $13000
Fixed overhead = $13.50 * 9000 units = $121,500
Total manufacturing overhead= $13,000+$121,500
= $134,500
Winkle Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing processing center consisted of 5,000 unites, 90% complete with respect to conversion costs. Ending work in process inventory consisted of 2,000 units, 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, how many would the equivalent units for conversion costs be?
a. 10,000 units
b. 12,200 units
c. 12,000 units
d. 6,700 units
Answer:
d. 6,700 units
Explanation:
The computation of the equivalent units for conversion cost by using the FIFO method is shown below:
= Beginning inventory units × remaining percentage + units started and completed + ending inventory units × completion percentage
= 5,000 × 10% + (10,000 - 5,000) + 2,000 × 60%
= 500 + 5,000 + 1,200
= 6,700 units
We simply applied the above formula
According to the classification system for global organizational culture as developed by Hofstede, the degree to which employees are threatened by ambiguity is known as:
Answer:
Uncertainty Avoidance
Explanation:
The term uncertainty avoidance was coined by a man named, Geert Hofstede to explain the extent to which people are willing to remain in a given situation so as to avoid uncomfortable circumstances. It reflects the extent to which people are unwilling to take risks. A low uncertainty avoidance index simply means that the people who have just been studied are willing to accommodate ambiguity and take risks. A high uncertainty avoidance on the other hand means that the people are more comfortable in their given positions and are unwilling to take risks.
So, in the employee situation, the degree to which employees are threatened by ambiguity is known as uncertainty avoidance.
Direct-mail questionnaires should be kept to a maximum of how many pages? A.One B.Two C.Three D.Four
Answer:
One page
Explanation:
Direct mail questionnaires should be kept to a maximum of a single page.
This is because the target audience of these mails which are the respondents will treat this like they treat regular mails and my not be disposed to answering or giving responses.
So an increased number of pages would surely further decrease the attention the questionnaire would receive from these respondents.
Thus, it is best that the questionnaire is restricted to a single page.
Jill Meier is the sole owner of Meier Corp., which provides her only source of income. Jill has always paid herself entirely by drawling dividends from her corporation. A friend suggested that as long as she is earning about what she would have to pay someone else to run the business, she might be better off paying herself a salary instead of dividends, because she would avoid the problem of double taxation. If Jill’s company earns $120,000 all of which she will pay to herself, how much will she take home under each method? Assume a corporate tax rate of 30%, a personal tax rate of 25% and a 15% tax on dividends.
Answer:
currently, Jill has to pay 30% x $120,000 = $36,000 in corporate income taxes
then, she must pay 15% x ($120,000 - $36,000) = $12,600 in dividend taxes
so her net pay = $120,000 - $36,000 - $12,600 = $71,400
if she decides to be an employee of her corporation, then she would pay only $120,000 x 25% = $30,000 in personal income taxes
so her net pay = $120,000 - $30,000 = $90,000
This calculation does not consider any FICA or FUTA taxes since I'm not sure where Jill lives and if those taxes apply there.
As the income of bus riders increased, the wages of bus drivers increased simultaneously. How does this affect the market for bus rides (inferior good)?
Answer:
The demand curve and supply curve will shift leftwards.
Explanation:
The increase in the income of riders will decrease the number of bus rides because there is an inverse relationship between income and inferior goods. Therefore, the demand curve for bus rides will shift leftwards. Moreover, the increase in wages is an input cost, therefore, the rise in input cost will shift the supply curve leftwards.
On February 1, a customer's account balance of $2,700 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method? Multiple Choice Debit Bad Debts Expense $2,700; credit Accounts Receivable $2,700. Debit Bad Debts Expense $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Accounts Receivable $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Bad Debts Expense $2,700.
Answer:
On February 1, a customer's account balance of $2,700 was deemed to be uncollectible.
The entry to be recorded on February 1 to record the write-off assuming the company uses the allowance method is:
Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700.
Explanation:
Using the allowance method, every bad debt entry is first reflected in the Allowance for Doubtful Accounts before it is taken to the bad debt expense account.
The entries above reduce the Accounts Receivable account by the amount of the write-off and reduces the Allowance for Doubtful Accounts by the same amount. Any recovery of written off debt is also treated in the Allowance for Doubtful Accounts and the Accounts Receivable account in revised order. This method is unlike the direct write-off method. With the direct write-off method, the Accounts Receivable is credited with the amount of the write-off and the write-off is expensed in the Bad Debts Expense account directly.
Boxwood Company sells blankets for $30 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 03 Purchase 6 $14 10 Sale 4 17 Purchase 12 $16 20 Sale 4 23 Sale 3 30 Purchase 12 $18 Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of May using the LIFO inventory cost method.
Answer:
The ending inventory for the month of May using the LIFO inventory cost method is $324.
Explanation:
LIFO
LIFO method assumes that the last goods purchased are the first ones to be issued to the final customer.
This means valuation of inventory will use the value of the earliest goods purchased.
Ending Inventory : 2 units × $14 = $28
5 units × $16 = $80
12 units × $18 = $216
Total = $324
Conclusion :
The ending inventory for the month of May using the LIFO inventory cost method is $324.
g Ryngard Corp's sales last year were $24,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO).
Answer:
1.50
Explanation:
TATO = (net sales)/(total assets)
= (24000/16000) = 1.50
The total asset turnover ratio (TATO) for Ryngard Corp was 1.50 last year.
Colgate reported Diluted EPS of $2.38 in accordance with GAAP. How much higher would EPS be if Colgate ignored the impact of restructuring and other one-time charges during the period? Please provide your answer with 2 decimal places, but without $ sign (Ex: 0.50)
Answer:
EPS will be higher than $2.38
Explanation:
The earnings per share are the income that is accessible to the company's shareholders after all the costs and taxes are deducted. Restructuring costs are one-time costs that are recorded in the income statement as other operating expenses.
The presence of restructuring and other one-time costs in the Revenue Statement leads to lower pre-tax earnings and cause decrease in net profit. When these expenses are excluded, the Earning would increase, resulting in the company's EPS.
Beginning and ending Cash account balances of Rainbow, Inc. were $14,000 and $32,000 respectively. If total cash paid out during the period was $30,000, what amount of cash was received during the period
Answer:
Cash receipts = $48,000
Explanation:
A cash budget is statement that shows the estimated cash receipts and the estimated cash payments for a forth coming accounting period. In addition, it provides information about the expected cash balance for the period to which it relates.
With help of a cash budget, a business can plan ahead for the usage of its surplus funds and how to finance its deficit cash position
Cash balance at the end = Opening cash balance + cash receipts - cash payment
Let represent the cash receipts by " y "
32,000 = 14,000 + y - 30,000
32,000 = y - 16 ,000
32,000 + 16,000 = y
48000 = y
Cash receipts = $48,000
Complements are products or services that have a potential impact on the _________ of the products or services of that company.
Answer:
Value
Explanation:
Hope this helps :)
Adama Company incurred the following costs. Indicate to which account Adama would debit each of the costs.
Sales tax on factory
1. machinery purchased $5,000 Select the account to be debited
Equipment Prepaid
Insurance Building Land
Land Improvements
2. Painting of and lettering on
truck immediately upon purchase 700 Select the account to be debited
Land Prepaid
Insurance Equipment Building Land
Improvements
3. Installation and testing of
factory machinery 2,000 Select the account to be debited
Prepaid
Insurance Building Land Equipment Land
Improvements
4. Real estate broker’s
commission on land purchased 3,500 Select the account to be debited
Land Land Improvements Prepaid
Insurance Building Equipment
5. Insurance premium paid for
first year’s insurance on new truck 880 Select the account to be debited
Land Equipment Prepaid Insurance Land
Improvements Building
6. Cost of landscaping on
property purchased 7,200 Select the account to be debited
Equipment Land
Improvements Land Building Prepaid
Insurance
7. Cost of paving parking lot for
new building constructed 17,900 Select the account to be debited
Land
Improvements Land Building Prepaid
Insurance Equipment
8. Cost of clearing, draining,
and filling land 13,300 Select the account to be debited
Prepaid Insurance Land Land
Improvements Building Equipment
9. Architect’s fees on self-
constructed building 10,000
Answer:
1. Insurance Equipment Building Land
2.Improvements
3.Insurance Building Land Equipment
4.Land
5.Prepaid Insurance
6.Improvements
7.Improvements
8.Land
9.Insurance Building Land Equipment
Explanation:
1. Machinery purchased is a capital expenditure and is included in cost of Equipment.
2. Painting on truck is an improvement, not included in cost of truck
3. These are costs directly related in placing asset in condition of use intended by management. Include in asset cost.
4.These are costs directly related in placing asset in condition of use intended by management. Include in asset cost.
5.This is an asset and economic benefits will flow in the entity in future.
6. Landscaping costs not included in cost of property. Stand on their own as improvements
7. Paving costs not included in cost of property. Stand on their own as improvements
8.These are costs directly related in placing asset in condition of use intended by management. Include in asset cost.
9.These are costs directly related in placing asset in condition of use intended by management. Include in asset cost.
If any of the customers in the market purchase any item from the shop, it experiences an amount to be deducted, and the shopkeeper experiences an amount to get added and this is known as the debiting and crediting of the amount. The shopkeeper when purchasing any of the raw material or anything experiences the amount to be debited situation.
The classification of various materials to be debited in the respective incurred cost is attached below.
To know more about the debiting of the costs in the firm to the respective account, refer to the link below:
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The limited liability company form of organization:__________.
a) is a poor choice for new businesses.
b) can offer stock incentives to employees.
c) affords less protection from liability than partnerships.
d) avoids the double taxation of C corporations.
Answer:
Avoids the double taxation of C corporations
Explanation:
Double taxation occurs when an organization is made to pay their income taxes two times. This means that the tax is paid both on a personal level and on a corporate level.
This type of taxation puts a strain on the amount of profit that is realised as the corporation is mandated to pay income tax twice after which the remaining amount of profit is distributed to its partners.
Limited liability company do not make such double taxation payment as this type of business is arranged as a flow-through-organisation, this means that the profits comes straight to the shareholders.
This does not mean that they are exempted from tax payment. In a limited liability company taxes are paid only on a personal level.
Sufra Corporation is planning to sell 150,000 units for $2.90 per unit and will break even at this level of sales. Fixed expenses will be $93,000. What are the company's variable expenses per unit
Answer:
$2.28
Explanation:
Breakeven point is the number of units produced and sold at which net income is equal to zero.
Breakeven = F / P - V
F = fixed
P = price
V = variable cost
150,000 = $93,000 / $2.90 - V
Multiply both sides of the equation by $2.90 - V
= ($2.90 - V)150,000 = $93,000
$435,000 - 150,000V = $93,000
V = $2.28
I hope my answer helps you
A company with a decreasing interest expense would see what change to its times interest earned?
a) An increase
b) A decrease
c) No change
d) Cannot be determined
Answer:
a) An increase
Explanation:
The times interest earned ratio is a ratio that measures the portion of the income or earning that can be used to pay for future interest expenses. Times interest earned ratio is also known as the coverage ratio and it can be computed using the following formula:
Times interest earned ratio = EBIT / Interest expense .............. (1)
Where EBIT denotes earning before interest and tax.
From equation, it can be seen that there is a negative relationship between times interest earned and interest expense. That is, as interest expense increases, times interest earned falls. On the other hand, as interest expense falls, times interest earned increases.
Therefore, the correct option is a) An increase, that is a company with a decreasing interest expense would see an increase to its times interest earned.
For financial accounting purposes, what is the total amount of product costs incurred to make 24,500 units
Answer:
The product cost for 24,500 units is $497,350.
Explanation:
The reason is that the the product cost always includes all the variable production cost and specific fixed production cost. In this scenario, direct material cost, direct labor cost, variable manufacturing overhead cost are variable production cost whereas the fixed manufacturing cost is specific fixed production cost which will form part of product cost. The remainder of the cost left is period cost.
Direct materials (24,500 * $7.7 per unit) $188,650
Direct labor (24,500 * $4.7 per unit) $115,150
Variable manufacturing overhead (24,500 * $2.2 per unit) $53,900
Fixed manufacturing overhead (24,500 * $5.7 per unit) $139,650
Total product costs $497,350
Potential GDP is:
a. minimum amount of output that can be produced given the labor force, capital stock, and technology.
b. maximum amount of output that can be produced given the labor force, capital stock, and technology.
c. varies over the business cycle.
d. none of the above.
Answer:
b. maximum amount of output that can be produced given the labor force, capital stock, and technology.
Explanation:
GDP refers to the gross domestic product which reflects the finalized value of the goods and services produced domestically
On the other side, the potential GDP refers to the maximum level of output that can be produced by considering the labor force, capital stock, technology by taking the constant inflation rate
Therefore option b is correct
Miller Company has the following account balances, extracted from its multiple-step income statement for the current year.
Required:
Compute the missing amounts.
Sales $107,800
Sales Returns and Allowances?
Sales Discounts 3,200 Net Sales ?
Cost of Goods Sold 48,200 Gross Profit 51,900 Selling Expenses?
General and Administrative Expenses 10,400 Total Operating Expenses 18,200 Net Income ?
Answer:
Net Sales = $100,100
Sales Return and allowances = $4,500
Net income = $33,700
Explanation:
Cost of goods sold 48,200
Gross Profit 51,900
Net Sales 100100
Sales Return and allowances = Sales - Net sales- Sales discounts = 107800-100100-3200 = 4500
Selling Expenses = Total operating expenses - General and Administrative Expenses = 18200 - 10400 = 7800
Net income = Gross profit - Total operating expenses
=51900-18200
= 33700
When unemployment is high, government policymakers might decide to do which of the following?
a. Decrease the amount of funds in the economy available for loans
b. Decrease government spending on goods and services
c. Increase government spending on goods and services
d. Raise taxes
Answer:
Option C is correct.
Explanation:
The option is C, “Increase government spending on goods and services” is correct because the spending by the government will create new employment opportunities. Therefore, this will decrease unemployment. However, if the government decreases the loan funds in the economy, decreases the spending on goods and services, and rises the taxes then it will raise unemployment in the economy.
In the case when the unemoloyment is high, the government policymakers should increase the government spending on the goods and services.
The following information should be considered:
The spending by the government developed the new employment opportunities.Due to this, the unemployment should decreased.In the case when the government reduced the loan funds so it reduced the spending on goods & services.Learn more: brainly.com/question/17429689
The annual interest rate on a credit card is 14.99%. If the minimum payment of $30 is made each month, how many months will it take to pay off an unpaid balance of $807.91?
Answer:
30.967 months
Explanation:
We can assume the number of months in which the credit card will be paid off to be x.
Since we are given that the unpaid balance on the credit card is $807.91 with annual interest of 14.99%
We can therefore calculate the amount of interest to be = 14.99/100 × $807.91
= $121.11
Then the total amount to be paid is
= $807.91 + $121.1
= $929.01
Also, since the minimum payment is $30 per month, x would therefore be;
= 929.01/30
= 30.967
It therefore means that the balance in the credit card will be paid off in 30.967 months.
True or false: The main purpose of both financial and managerial accounting is similar in that both aim to provide relevant information to its users.
Answer: True
Explanation:
Even though Financial and Managerial accounting differ in the type of people who use it with Financial being used both internally and externally and Managerial being used internally, the main purpose is to provide relevant information to it's users.
Managerial accounting concerns analyzing and interpreting financial as well as other data so that the management can make informed decisions about their course of action.
Financial Accounting on the other hand provides the public with financial data on a company so that they may know whether to invest. Either way, they are both providing relevant information to users.
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who together produced an average of 100 carts per hour. Workers receive $20 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $11 per hour while output increased by 5 carts per hour.
Required:
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment. (Round to 4 decimal places)
b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places)
Answer:
a. The multifactor productivity(MFP)Prior to buying the new equipment=0.71 carts
b. The % growth in productivity between the Prior and after buying the new equipment=12.81%
Explanation:
a. In order to calculate the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment we would have to make the following calculation:
multifactor productivity(MFP)Prior to buying the new equipment=Carts produced / [(Number of workers x Worker wage) + Equipment cost)
According to given data we have the following:
Carts produced=100 per hour
(Number of workers= 5
Worker wage=$20
Equipment cost=$40
Therefore, multifactor productivity(MFP)Prior to buying the new equipment=100 / [(5 x $20) + $40
multifactor productivity(MFP)Prior to buying the new equipment=0.71 carts
b. In order to calculate the % growth in productivity between the Prior and after buying the new equipment we would have to make the following calculation:
% growth in productivity between the Prior and after buying the new equipment=(New productivity - Old productivity) / Old productivity] x 100
multifactor productivity(MFP after buying the new equipment=105 / [(4 x $20) + $51
multifactor productivity(MFP after buying the new equipment=0.801
Therefore, % growth in productivity between the Prior and after buying the new equipment=0.801 - 0.71) / 0.71] x 100
% growth in productivity between the Prior and after buying the new equipment=12.81%
The following information describes a product expected to be produced and sold by Hadley Company:selling price.......................$80 per unit
variable costs....................$32 per unit
Toatal fixed costs...............$ 630,000
Required:
(a) calculate the contribution margin in units.
(b) calculate the break-even point in units and in dollar sales.
(c) What dollar amount of sales would be necessary to achieve an income of $120,000?
Answer:
a. Contribution margin per unit is $48 per unit
b. Break-even point in units is 13,125 units; and Break-even point in dollar sales is $1,050,000
c. Dollar amount of sales to achieve $120,000 income is $1,250,000.
Explanation:
These can be determined as follows:
(a) calculate the contribution margin in units.
Contribution margin in units is the selling price per unit minus the variable cost per unit that produces incremental earning for each unit sold. This can be calculated as follows:
Contribution margin per unit = Selling price per unit - Variable cost per unit = $80 - $32 = $48 per unit
b) Calculate the break-even point in units and in dollar sales.
Break even point is the point at which there is no net loss or gain, i.e. where total revenue is equal to to cost. This can be calculated both in units and dollar sales as follows:
Break-even point in units = Total fixed costs / Contribution margin in units = $630,000 / $48 = 13,125 units
Break-even point in dollar sales = Selling price * Break-even point in units = $80 * 13,125 = $1,050,000
(c) What dollar amount of sales would be necessary to achieve an income of $120,000?
To calculate this, we first calculate the contribution margin ratio as follows:
Contribution margin ratio = Contribution margin in units / Selling price = $48 / $80 = 0.60
Therefore, we have:
Dollar amount of sales to achieve $120,000 income = (Targeted income + Total Fixed costs) / Contribution margin ratio = ($120,000 + $630,000) / 0.60 = $1,250,000.
a. The contribution margin in units is $48 per unit.
b. The break-even point in units and in dollar sales is $1,050,000.
c. The dollar amount of sales would be necessary to achieve an income of $120,000 is $1,250,000.
a. Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit Contribution margin per unit= $80 - $32
Contribution margin per unit= $48 per unit
b. Break-even point in units and in dollar sales:
Break-even point in units = Total fixed costs / Contribution margin in units
Break-even point in units= $630,000 / $48
Break-even point in units = 13,125 units
Break-even point in dollar = Selling price × Break-even point in units
Break-even point in dollar= $80×13,125
Break-even point in dollar= $1,050,000
c. Dollar amount of sales:
Contribution margin ratio = Contribution margin in units / Selling price
Contribution margin ratio = $48 / $80
Contribution margin ratio = 0.60
Dollar amount of sales = (Targeted income + Total Fixed costs) / Contribution margin ratio
Dollar amount of sales = ($120,000 + $630,000) / 0.60
Dollar amount of sales=$750,000/0.60
Dollar amount of sales = $1,250,000
Inconclusion the contribution margin in units is $48 per unit, the break-even point in units and in dollar sales is $1,050,000 and the dollar amount of sales would be necessary to achieve an income of $120,000 is $1,250,000.
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