question 1- Nice Corporation produces and sells a single product. Data concerning that product appear below:...

question 1- Nice Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 200 100 % Variable expenses 40 20 % Contribution margin $ 160 80 % Fixed expenses are $120,000 per month. The company is currently selling 1,300 units per month.

Required: Management is considering using a new component that would increase the unit variable cost by $49. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?

question 2 - Jelly Inc.'s contribution margin ratio is 62% and its fixed monthly expenses are $50,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $143,000?

question 3 -

The contribution margin ratio of Candle Corporation's only product is 60%. The company's monthly fixed expense is $455,700 and the company's monthly target profit is $41,700.

Required:

Determine the dollar sales to attain the company's target profit.

Solutions

Expert Solution

Question 1 :

	At present
Sales [ 1300 * 200 ]	260000
(-) Variable costs [ 1300 * 40 ]	52000
Contribution margin	208000
(-) Fixed costs	120000
Net operating income	88000

	After change
Sales [ (1300+500) * 200 ]	360000
(-) Variable costs [ (1300+500) * (40+49) ]	160200
Contribution margin	199800
(-) Fixed costs	120000
Net operating income	79800

Net operating income after change	79800
(-) Net operating income at present	88000
Decrease in net operating income	-8200

The net operating income will decrease by $8,200

Question 2 :

Sales	143000
(*) Contribution margin ratio	62%
Contribution margin	88660
(-) Fixed expenses	50500
Net operating income	38160

Question 3 :

Dollar sales to attain the company's target profit = ( Fixed expenses + Target profit ) / Contribution margin ratio = ( 455700 + 41700 ) / 60% =	829000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1. Winston Corporation produces and sells a single product. Data concerning that product appear below: Particulars...

1. Winston Corporation produces and sells a single product. Data concerning that product appear below: Particulars Total (In BD) Sales (60,000 units) 3,000,000 Direct Materials 1,000,000 Direct Labor 200,000 Manufacturing Overhead: Variable 300,000 Fixed 400,000 Selling & Administrative: Variable 400,000 Fixed 100,000 Required: A. As a management accountant, what strategy will you adopt in ascertain the following performance indicators for the company? 1. Unit contribution margin. 2. Contribution margin ratio. 3. Break-even in sales (BD). 4. Margin of safety percentage....

Frisch Corporation produces and sells a single product. Data concerning that product appear below: Selling price...

Frisch Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $ 170 Variable expense per unit $ 80 Fixed expense per month $ 140,000 Required: Given the present situation, compute a. The break-even sales in units. b. The break-even sales in dollars. c. The sales in dollars that would be required to produce a net operating income of $100,000. (1 Mark) d. The margin of safety in dollars if the company’s actual...

Brihon Corporation produces and sells a single product. Data concerning that product appear below: Selling price...

Brihon Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $500 Variable expense per unit $350 Fixed expenses $966,000 Required: (You must show your work.) a. How many units must Brihon sell to break even? (5 pts.) b. What is Brihon’s breakeven sales in dollars? (5 pts.) c. If Brihon had total sales of $4,500,000, what is the margin of safety in units _________________ and dollars _______________? (10 pts.) d. If Brihon...

Gauani Corporation produces and sells a single product. Data concerning that product appear below: Selling price...

Gauani Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $150.00 Variable expense per unit $42.00 Fixed expense per month $421,200 Required: a. Assume the company's monthly target profit is $21,600. Determine the unit sales to attain that target profit. Show your work! b. Assume the company's monthly target profit is $54,000. Determine the dollar sales to attain that target profit. Show your work! Please provide process details.

Wilson Corporation produces a single product. Data concerning the company’s operations last year appears below: Units...

Wilson Corporation produces a single product. Data concerning the company’s operations last year appears below: Units in beginning inventory…………………………………………….……… 0 Units produced…………….……………………………………………..……… 10,000 Units sold………………………………………………………………………… 9,180 Selling price per unit……………………………………………………….…… $75.00 Variable costs per unit: Direct materials……………………………………………………… $22.75 Direct labor………………………………………………………….. $8.15 Variable manufacturing overhead…………… ……………………… $5.83 Variable selling and administrative……………...…………………… $5.50 Fixed costs in total: Fixed manufacturing overhead…………………………………… $202,400 Fixed selling and administrative………………...………………… $70,500 Required: Compute the unit product cost under absorption costing....

Data concerning Cutshall Enterprises corporation's single product appear below: Note: fixed or variable Expenses is the...

Data concerning Cutshall Enterprises corporation's single product appear below: Note: fixed or variable Expenses is the same as fixed or variable costs. Selling price per unit....$190.00 Variable expense per unit...$91.20 Fixed expenses per month...$424.840 the unit sales to attain the company 's monthly target profit of $16.000 is closest to: A) 3,872 B)2,320 C)4,834 D)4,462

Cranston Corporation makes four products in a single facility. Data concerning these products appear below: Products...

Cranston Corporation makes four products in a single facility. Data concerning these products appear below: Products A B C D Selling price per unit $ 42.30 $ 50.00 $ 37.60 $ 33.50 Variable manufacturing cost per unit $ 20.80 $ 30.70 $ 21.00 $ 19.90 Variable selling cost per unit $ 2.70 $ 2.10 $ 1.00 $ 2.40 Milling machine minutes per unit 3.30 4.10 2.60 1.30 Monthly demand in units 1,000 4,000 3,000 3,000 The milling machines are potentially...

Data concerning Wislocki Corporation's single product appear below: Per Unit Percent of Sales Selling price $...

Data concerning Wislocki Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 185 100 % Variable expenses 37 20 % Contribution margin $ 148 80 % Fixed expenses are $1,047,000 per month. The company is currently selling 9,300 units per month. Required: The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $13 per unit. In exchange, the sales staff would accept...

Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $...

Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 180 100 % Variable expenses 45 25 % Contribution margin $ 135 75 % Fixed expenses are $1,048,000 per month. The company is currently selling 9,400 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $12 per unit. In exchange, the sales staff would accept an...

Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $...

Data concerning Ulwelling Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 160 100 % Variable expenses 48 30 % Contribution margin $ 112 70 % Fixed expenses are $1,054,000 per month. The company is currently selling 9,800 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $8 per unit. In exchange, the sales staff would accept an...

Subjects