Question
In: Accounting
Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000...
Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000 0.24 $1,350,000 $1,150,000 Fixed Costs Selling $500,000 Administrative $485,000 Manufacturing Overhead $150,000 $1,135,000 Profit Dollars Percentage Calculate the Contribution Margin Calculate the Gross Margin Ratio Calculate Breakeven Sales Calculate Margin of Safety based on the 5% expected sales increase.
| Income Statement | Projected Income Statement | ||||||
| Sales Revenue | $2,500,000 | ||||||
| Variable Costs | |||||||
| Purchases | $750,000 | 0.3 | |||||
| Direct labor | $600,000 | 0.24 | $1,350,000 | ||||
| $1,150,000 | |||||||
| Fixed Costs | |||||||
| Selling | $500,000 | ||||||
| Administrative | $485,000 | ||||||
| Manufacturing Overhead | $150,000 | $1,135,000 | |||||
| Profit | |||||||
| Dollars | Percentage | ||||||
| Calculate the Contribution Margin | |||||||
| Calculate the Gross Margin Ratio | |||||||
| Calculate Breakeven Sales | |||||||
| Calculate Margin of Safety based on the 5% expected sales increase. | |||||||
Solutions
Expert Solution
| Income Statement | Projected Income Statement | |
| Sales Revenu (a) | $2,500,000 | $2,625,000 |
| (2500000*1.05) | ||
| Les: Variable cost | ||
| Purchase (30% X a) | $750,000 | $787,500 |
| Direct Material (24%*a) | $600,000 | $630,000 |
| Total Variable cost (b) | $1,350,000 | $1,417,500 |
| Contribution Margin (c= a-b) | $1,150,000 | $1,207,500 |
| Less: Fixed Cost (d) | ||
| Selling | $500,000 | $500,000 |
| Administrative | $485,000 | $485,000 |
| Manufacturing OH | $150,000 | $150,000 |
| Total Fixed Oh | $1,135,000 | $1,135,000 |
| Profit (e=c-d) | $15,000 | $72,500 |
| Contribution Margin Ratio= Contribution / Sales |
| Projected |
| = 1207500/2625000= 46% |
| Contribution Margin Dollar:= $1207500 |
| Original |
| =1150000/2500000= 46% |
| Contribution Margin Dollar:= $1150000 |
| Gross Margin Ratio= Gross Profir / Sales |
| Projected |
| 1057500/2625000= 40.29% |
| Gross Profit= Sales- Variable Cost- Manufacturing Overhead |
| =2625000-1417500-150000= 1057500 |
| Original |
| 1000000/2500000= 40% |
| Gross Profit= Sales- Variable Cost- Manufacturing Overhead |
| =2500000-1350000-150000= $1000000 |
| Projected |
| BreakEven Sales (in $)= Fixed Cost/ CM Ratio |
| =1135000/ 46%= 2467391 |
| Break Even Sales %= Breakeven Sales/ Total Sales |
| =2467391.304/2625000= 94% |
| Original |
| BreakEven Sales (in $)= Fixed Cost/ CM Ratio |
| =1135000/ 46%= 2467391 |
| Break Even Sales %= Breakeven Sales/ Total Sales |
| =2467391.304/250000= 98.70% |
| Margin of Safety |
| Total Sales- BEP Sales |
| =2625000-2467391.304= $157608.69 |
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