Question

In: Accounting

Rubbermaid produces and sells plastic storage sheds. Its current sales are $500,000. The company's accountant provided...

Rubbermaid produces and sells plastic storage sheds. Its current sales are $500,000. The company's accountant provided the following cost information:

Manufacturing costs

$

100,000

+

40

%

of sales

Selling costs

$

30,000

+

10

%

of sales

Administrative costs

$

45,000

+

10

%

of sales

Required:

1) Compute the product's contribution margin ratio.

2) Compute the company's current net income.

3) Compute the product's break-even point in dollars.

4) Compute the amount of revenue necessary to earn $60,000 in profit.

5) Compute the company's current margin of safety ratio.

6) Should the company accept a proposal that increases sales by 20% and total fixed costs by 25%?

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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