Question

In: Accounting

Goony Inc., which produces and sells a single product, has provided the following contribution format income...

Goony Inc., which produces and sells a single product, has provided the following contribution format income statement for December: Required: Redo the company's contribution format income statement assuming that the company sells 3,400 units and answer the questions below based upon the new sales level. New Company contribution statement (use this table) category Total Per unit ratio Sale (3400 units) $268,600 per unit $79 ratio 100.00% Less: Variable expenses $125,800 per unit $37 ratio 46,84% Contribution margin $142,800 per units $42 ratio 53,16% Less: Fixed expenses $113,600 Net operating income $29,200

1. What is the unit contribution margin? $ 79 - $ 37 = $42

2. What is the contribution margin ratio? 100.00% - 46,84% = 53,16%

3. What is the contribution margin in dollars $ 268,600 - $ 125,800 = $142,800

4. What are the fixed costs? $ 113,600

5. If sales are increased by 95,000, what is net income?

6. If the variable cost per unit increases by $8, spending on rent increases by $14,500, and unit sales increase by 5000 units, what would be the net operating income?

7. What is the breakeven point in dollars?

8. What is the breakeven point in units?

. What do I need to sell if I want to achieve a target profit of 115,000 a. In units b. In dollars

10. What is the margin of safety a. In dollars b. Margin of safety ratio

Expert Solution

Answer :

1) Unit Contribution = Sales - Variable cost

= 79 - 37

Unit Contribution = $42

2) Contribution margin ratio = Sales percentage - variable cost percentage

= 100% - 46.84%

Contribution margin ratio = 53.16

3) Contribution margin in Dollars = Sales - Variable cost

= 268,600 - 125,800

Contribution margin in Dollars = $142,800

4) Fixed cost : Given 113,600

5) If Sales increases by 95,000 and Net Income is $76,689

6)

7)

Requirement 9b)

Contribution margin = Contribution / Net sales

= 45/ 79 = 0.5

Contribution margin = 0.5

ekkarill92 answered 2 years ago

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