Super Gutter sells pipes for $11 each. The unit variable costs per pipe are $8.00. Fixed...

Super Gutter sells pipes for $11 each. The unit variable costs per pipe are $8.00. Fixed costs total $4,820.

Required:

7. What is the contribution margin per pipe?

8. What is the break-even point in dollars?

9. How many pipes must be sold to earn a pre-tax income of $5,000?

10. What is the margin of safety assuming 1,800 pipes are sold?

Expert Solution

Solution


Unit Selling Price	$11
Unit Variable Cost	$8
Contribution	$3
Fixed Costs	$4,820

7
Contribution Margin per Pipe is $3

8
Break Even Point in dollars
Fixed Costs / Contibution
$4820 / $3
1607 units

Break Even Point in dollars
1607 * $11
$17,677

9
Pipes to sold to earn $5000
Profit to be made	$5,000
Add - Fixed Cost	$4,820
Contribution in value (a)	$9,820
Contibution Per unit (Given) (b)	$3
Units to be sold for $5000 Profit (a/b)	3273

10
Margin of Safety assuming 1800 pipes are sold
Margin of Safety = Sales - Break even Sales

Break Even Units = 1607 (calculated in 8 point)
Margin of Saftey = 1800 - 1607
Margin of Saftey = 193 units
*Margin of Saftey in value = 193 units11 = $2123**

If you have any query, feel free to ask and if you are satisfied with the solution then please give me positive rating, it would really help me

ekkarill92 answered 2 years ago

Plymouth Corp. sells units for $100 each. Variable costs are $75 per unit, and fixed costs...

Plymouth Corp. sells units for $100 each. Variable costs are $75 per unit, and fixed costs are $200,000. If Plymouth leases a new machine, fixed costs will increase by $60,000 a year, but production will be more efficient, saving $5 per unit. At what level of production will Plymouth be indifferent between leasing and not leasing the new machine?

1) Suppose that a company has fixed costs of $15 per unit and variable costs $11...

1) Suppose that a company has fixed costs of $15 per unit and variable costs $11 per unit when 15,500 units are produced. What are the fixed costs per unit when 11,000 units are produced? 2)Total costs for ABC Distributing are $240,000 when the activity level is 9,000 units. If variable costs are $3.0 per unit, what are their fixed costs? 3)Park and West, LLC, provides consulting services to retail merchandisers in the Midwest. In 2019, they generated $750,000 in...

11 Green Company sells its product for $11100 per unit. Variable costs per unit are: manufacturing,...

11 Green Company sells its product for $11100 per unit. Variable costs per unit are: manufacturing, $5600; and selling and administrative, $125. Fixed costs are: $51000 manufacturing overhead, and $61000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 34 units per year in 2018–2020. Sales were 34 units in 2018, 30 units in 2019, and 38 units in 2020. Income under absorption costing for 2020 is $79650. $85250. $86250. $92250.

1. A company has fixed cost of $45,000, variable cost per unit of $11, and sells...

1. A company has fixed cost of $45,000, variable cost per unit of $11, and sells its product at $18 each. a) What quantity must the firm sell in order to break-even? Explain how you reached this conclusion. b) What is the firm's total revenue at the break-even level of output? Show your calculation. c) What is the firm's total variable cost at the break-even level of output? d) What quantity must the firm sell in order to make a...

Fixed costs are P10 per unit and variable costs are P25 per unit. Production was 13,000...

Fixed costs are P10 per unit and variable costs are P25 per unit. Production was 13,000 units, while sales were 12,000 units. Determine (a) whether variable cost income from operations is less than or greater than absorption costing income from operations, and (b) the difference in variable costing and absorption costing income from operations.

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10...

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10 Fixed MOH= $50,000 Fixed S&A costs=$10,000 Units produced=5000 Units sold= 4000 Produce a full absorption income statement, what is the operating income produce a variable costing income statement, what is the operating income if units produced exceeds untis sold, does full absorption accounting or varible cost account result in a higher operating income

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed...

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed costs are $125,800. a. What is the break-even point in units? b. What unit sales would be required to earn a target profit of $321,900? c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 decimal places.) d. If sales decrease by 30% from that level, by what percentage...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed costs are $75000. answer following questions. a) what is break even points in units? b) what unit sales would be required to earn a profit target of $200,000 c) assume they achieve the sales required in part b what is the degree of operating leverage? d) if sales decrease by 30% from that level by what percentage will profits decrease?

McGraw Hills Corporation sells managerial accounting textbooks. Fixed costs are $120,000 and variable costs per unit...

McGraw Hills Corporation sells managerial accounting textbooks. Fixed costs are $120,000 and variable costs per unit are $20. McGraw Hills is considering the purchase of new equipment that would reduce hourly labor. However, total costs will remain the same. What effect would the purchase of the new equipment have on McGraw Hills’ operating leverage? A) No effect. Operating leverage will stay the same because total costs do not change. B) Operating leverage will increase. C) Operating leverage will decrease. D)...

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are...

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $12,000. At this selling price, the company earns a profit equal to 10% of total dollar sales. By reducing its selling price to $9 per unit, the manufacturer can increase its unit sales volume by 25%. Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged. If the selling price...

Question