Question

In: Accounting

Juniper had revenues of $454,000 in March. Fixed costs in March were $278,720 and profit was...

Juniper had revenues of $454,000 in March. Fixed costs in March were $278,720 and profit was $25,460.

a. What was the contribution margin percentage?

b. What monthly sales volume (in dollars) would be needed to break-even?

c. What was the margin of safety for March?

Expert Solution

For contribution margin first we have to calculate variable cost.

Profit = Revenue from sale - (Fixed cost + Variable cost)

25460 = 454000 - (278720+ Variable cost)

25460 = 454000 - 278720 - Variable cost

Variable cost = 454000 - 278720 - 25460

Variable cost = $149820

a. Contribution margin percentage = [(Total revenue - Variable cost) / Total revenue] * 100

= [(454000 - 149820) / 454000] * 100

= [304180 / 454000] * 100

= 0.67*100

Contribution margin percentage = 67%

b. Breakeven sales volume in dollars = Total fixed expenses / Contribution margin percentage

= 278720 / (67/100)

= 278720 / 0.67

Breakeven sales volume = $416000

c. Margin of safety in dollars = Revenue from sales - Breakeven sales

= 454000- 416000

Margin of safety in dollars = $38000

Margin of safety in percentage = [(Revenue from sales - Breakeven sales) / Revenue from sales] * 100

= [38000/454000]*100

Margin of safety in percentage = 8.37%

ekkarill92 answered 2 years ago

. Fixed Costs, Variable Costs, Total Costs, Revenues are used to estimate profitability. This is an...

. Fixed Costs, Variable Costs, Total Costs, Revenues are used to estimate profitability. This is an intersection with Economics and Accounting. Explain how they are derived and used for both disciplines.

Last month Empire Company had a $40,850 profit on sales of $301,000. Fixed costs are $88,580...

Last month Empire Company had a $40,850 profit on sales of $301,000. Fixed costs are $88,580 a month. By how much would sales be able to decrease for Empire to still break even? A. $95,000 B. $341,850 C. $206,000 D. $129,430

Assuming volume decreases 10%, what will revenues, variable costs and fixed costs be in year 2?

Consider the same company one more time:Revenues: 500Variable Costs 250Fixed Costs 1001. Assuming volume decreases 10%, what will revenues, variable costs and fixed costsbe in year 2? What will operating income be? What will the operating margin be inyear 2?2. Assume in the above that variable costs were 150 and fixed costs were 200.What will revenues, variable costs and fixed costs be in year 2? What will theoperating margin be in year 2?

When revenues, costs and gross profit are recognized at the completion of the contract rather than...

When revenues, costs and gross profit are recognized at the completion of the contract rather than periodically throughout the contract: a) Costs are higher and gross profit is lower b) Either method results in the same revenues, costs and gross profits being recognized by the end of the project. c) Revenues are higher and gross profit is lower d) Revenues and gross profit are higher What is the relationship between Construction-in-progress (CIP) and the Billings on Construction Contract account? a)...

(a) What were the fixed costs of production for the firm?

Output per month Price Total Revenue Total Cost Total Profit Marginal Revenue* Marginal Cost* Average Total Cost Profit per Unit (Price Minus Average Cost) 0 $ 1,000 $ 0 $ 60,000 -$60,000 - - - - 100 1,000 100,000 90,000 10,000 $ 1,000 $ 300 $900 $100 200 1,000 200,000 130,000 70,000 1,000 400 650 350 300 1,000 300,000 180,000 120,000 1,000 500 600 400 400 1,000 400,000 240,000 160,000 1,000 600 600 400 500 1,000 500,000 320,000 180,000 1,000 ...

What is profit? There is accounting profit discussed in the textbook: profit = total revenues –...

What is profit? There is accounting profit discussed in the textbook: profit = total revenues – explicit costs Let me relate profit to the factors of production. The three factors of production according to the textbook are land, labor, and capital. Let me add a fourth factor found in many economics textbooks: a return to the entrepreneur! (Entrepreneurs provide two services to society: organize resources and assume risk.) So how does a firm or entrepreneur maximize its profits? The answer...

Consider the following company. Revenues: 500 Variable Costs: 250 Fixed Costs: 100 Operating Income: 150 Assuming...

Consider the following company. Revenues: 500 Variable Costs: 250 Fixed Costs: 100 Operating Income: 150 Assuming that volume increases 10%, what will revenues, variable costs, and fixed costs be in year 2? What will operating income be? What will the operating margin be in year 2? Assume in the example above that variable costs were 150 and fixed costs were 200. What will revenues, variable costs and fixed costs be in year 2? What will the operating margin be in...

1. Consider the following company. Revenues: 500 Variable costs 250 Fixed costs 100 Operating Income 150...

1. Consider the following company. Revenues: 500 Variable costs 250 Fixed costs 100 Operating Income 150 1. Assuming that volume increases 10%, what will revenues, variable costs and fixed costs be in year 2? What will operating income be? What will the operating margin be in year 2? 2. Assume in the example above that variable costs were 150 and fixed costs were 200. What will revenues, variable costs and fixed costs be in year 2? What will the operating...

COSTS AND REVENUES FOR URGENT CARE CENTER COSTS: Urgent Care Center All costs and revenues are...

COSTS AND REVENUES FOR URGENT CARE CENTER COSTS: Urgent Care Center All costs and revenues are per year * Labor Cost 5 Primary Care Physicians Salary $150,000 $ 750,000 8 RN/BSN Salary Salary $ 64,000 $ 512,000 Payroll Taxes (all employees) $ 327,400 Benefits (all employees) $1,893,000 * Other Variable Costs Supplies & Misc. Overhead $ 102,400 Advertising $ 35,000 TOTAL VARIABLE COST $3,619,800 * Capital Cost Annualized Building Cost $ 465,403...

Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2019 of $900,000. Cash Expenses...

Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2019 of $900,000. Cash Expenses are $600,000, plus depreciation of $100,000. All revenues were collected in cash, and all expenses, excluding depreciation, were paid in cash during the year. No other assets were purchased, and no money was borrowed. a. Construct ICUP’s Income Statement. Net Income $ b. What was ICUP’s Cash Flow for the year? Cash Flow $ c. If PU changed its depreciation method so that the...