In: Accounting
2.) Harry Company sells 27,000 units at $34 per unit. Variable costs are $21.08 per unit, and fixed costs are $160,500.
Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.
a. Contribution margin ratio (Enter as a whole number.) | % | |
b. Unit contribution margin (Round to the nearest cent.) | $ | per unit |
c. Income from operations | $ |
3.) Megan Company has fixed costs of $505,920. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow:
Product | Selling Price | Variable Cost per Unit | Contribution Margin per Unit | ||||||
$390 | $260 | $130 | |||||||
ZZ | 530 | 380 | 150 |
The sales mix for Products QQ and ZZ is 70% and 30%, respectively. Determine the break-even point in units of QQ and ZZ. If required, round your answers to the nearest whole number.
a. Product QQ units
b. Product ZZ units
4.) Tucker Co. reports the following data:
Sales | $416,600 | |
Variable costs | 270,800 | |
Contribution margin | $145,800 | |
Fixed costs | 117,800 | |
Income from operations | $28,000 |
Determine Tucker Company's operating leverage. Round your answer to one decimal place.
Q2. | |||||
Selling price | 34 | ||||
Less: VC per unit | 21.08 | ||||
Contribution margin per unit | 12.92 | ||||
Divide: Selling price | 34 | ||||
Contribution margin ratio | 38.00% | ||||
Contribution margin ratio | 38% | ||||
Unit contribution | 12.92 | ||||
Income from Operations: | |||||
Sales (27000*34) | 918000 | ||||
Less: Variable cost (21.08*27000) | 569160 | ||||
Contribution margin | 348840 | ||||
Less: Fixed cost | 160500 | ||||
Net Income from Operations | 188340 | ||||
Q3. | |||||
Weighted unit contribution = 130*70% + 150*30% = $ 136 per unit | |||||
Break even units = Fixed cost / Weighted unit contribution | |||||
505,920 / 136 = 3720 units | |||||
Break even units of QQ = 3720*70% = | 2604 | units | |||
Break even units of ZZ = 3720*30% = | 1116 | units | |||
Q4. | |||||
Operating leverage: | |||||
Contribution margin | 145800 | ||||
Divide: Income from Operations | 28000 | ||||
Operating leverage: | 5.2 | ||||