Question

In: Accounting

The manager of Dukey’s Shoe Station estimates operating costs for the year will include $405,000 in...

The manager of Dukey’s Shoe Station estimates operating costs for the year will include $405,000 in fixed costs. Required: a. Find the break-even point in sales dollars with a contribution margin ratio of 50 percent. b. Find the break-even point in sales dollars with a contribution margin ratio of 30 percent. c. Find the sales dollars required to generate a profit of $250,000 for the year assuming a contribution margin ratio of 50 percent.

Solutions

Expert Solution

a. Break even point = Fixed costs / Contribution margin ratio
= $       4,05,000 50%
= $       8,10,000
b. Break even point = Fixed costs / Contribution margin ratio
= $       4,05,000 30%
= $     13,50,000
c. Sales required = Required contribution margin / Contribution margin ratio
= $       6,55,000 / 50%
= $     13,10,000
Working:
Fixed costs $       4,05,000
Add target profit $       2,50,000
Target Contribution margin $       6,55,000

ekkarill92 answered 3 months ago
Next > < Previous

Related Solutions

a taxpaying​ entity, estimates that it can save $23,000 a year in cash operating costs for...
a taxpaying​ entity, estimates that it can save $23,000 a year in cash operating costs for the next 8 years if it buys a​ special-purpose eye-testing machine at a cost of $ 90000 No terminal disposal value is expected. Seattle Hospital's required rate of return is 12%. Assume all cash flows occur at​ year-end except for initial investment amounts. Seattle Hospital uses​ straight-line depreciation. The income tax rate is 28% for all transactions that affect income taxes. 1. Calculate the...
The advertising alternatives for a company include television, radio, and newspaper advertisements. The costs and estimates...
The advertising alternatives for a company include television, radio, and newspaper advertisements. The costs and estimates for audience coverage are given in following table: television newspaper radio Cost per advertisement $ 2000 $ 600 $ 300 Audience per advertisement 100,000 40,000 18,000 The local newspaper limits the number of weekly advertisements from a single company to ten. Moreover, in order to balance the advertising among the three types of media, no more than half of the total number of advertisements...
The primary goal of a financial manager should be to __________. a. minimize operating costs b....
The primary goal of a financial manager should be to __________. a. minimize operating costs b. minimize interest payments c. minimize tax payments d. maximize operating income each year e. maximize the value of the firm's stock
Pests Be Gone, Inc., has sales of $679,000, total costs of $405,000, depreciation expense of $46,000,...
Pests Be Gone, Inc., has sales of $679,000, total costs of $405,000, depreciation expense of $46,000, interest expense of $30,000, and a tax rate of 40 percent. If the firm paid out $79,000 in cash dividends. What is the addition to retained earnings? Note: This problem is to give you practice constructing the income statement. COGS and selling/administrative expenses have been lumped together.
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash $107,900 Accounts Receivable 200,700 Finished Goods 42,100 Work in Process 28,100 Materials 46,200 Prepaid Expenses 3,400 Plant and Equipment 486,600 Accumulated Depreciation—Plant and Equipment $209,200 Accounts Payable 138,800 Common Stock, $10 par 350,000 Retained Earnings 217,000 $915,000 $915,000 Factory...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash $85,000 Accounts Receivable 125,600 Finished Goods 69,300 Work in Process 32,500 Materials 48,900 Prepaid Expenses 2,600 Plant and Equipment 325,000 Accumulated Depreciation—Plant and Equipment $156,200 Accounts Payable 62,000 Common Stock, $10 par 180,000 Retained Earnings 290,700 $688,900 $688,900 Factory...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash $109,000 Accounts Receivable 189,700 Finished Goods 39,800 Work in Process 26,600 Materials 43,600 Prepaid Expenses 3,200 Plant and Equipment 515,600 Accumulated Depreciation—Plant and Equipment $221,700 Accounts Payable 138,800 Common Stock, $10 par 350,000 Retained Earnings 217,000 $927,500 $927,500 Factory...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year...
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash $104,100 Accounts Receivable 177,000 Finished Goods 37,200 Work in Process 24,800 Materials 40,700 Prepaid Expenses 3,000 Plant and Equipment 510,100 Accumulated Depreciation—Plant and Equipment $219,300 Accounts Payable 127,800 Common Stock, $10 par 350,000 Retained Earnings 199,800 $896,900 $896,900 Factory...
Describe menu costs, transactions costs, and shoe leather costs and how these costs might affect the...
Describe menu costs, transactions costs, and shoe leather costs and how these costs might affect the speed at which prices adjust to new economic information (i.e. create inefficiencies).   What is the current rate of inflation? Is that rate higher/lower/on par with the typical range of inflation in the U.S. economy in the last decade or so? Explain answer.
City Hospital, a nonprofit organization, estimates that it can save $28,000 a year in cash operating...
City Hospital, a nonprofit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eyetesting machine at a cost of $110,000. No terminal disposal value is expected. City Hospital’s required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. Calculate the following for the new computer system: a. Net present value b. Payback period...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT