2.) Harry Company sells 27,000 units at $34 per unit. Variable costs are $21.08 per unit,...

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
QQ	$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.

Solutions

Expert Solution

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 = 13070% + 15030% = $ 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

ekkarill92 answered 1 year ago

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