Question

In: Accounting

# of canoes sold and produced 550 750 900 Total Costs variable costs 104,500 142,500 171,000...

# of canoes sold and produced

 550 750 900
Total Costs
variable costs 104,500 142,500 171,000
fixed costs 198,000 198,000 198,000
total costs 302,500 340,500 369,000
cost per unit
variable cost per unit 190.00 190.00 190.00
fixed cost per unit 360.00 264.00 220.00
total cost per unit 550.00 454.00 410.00

Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows:

1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars.

2. If Sandy Bank sells 1,570 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales price of $500.)

3.  Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $130,000 profit.

1. Supose that Sandy Bank

Solutions

Expert Solution

* Calculation: 1. Break even - Total Fixed Cost Point Cunits) selling price - Variable Cost Pes unit 500-190 - 638.71 unity 639 units . Breakeven Point (sales dollar) Total Fixed cost Contribution margin viatio 198000 (500-190) / 500 - . 198000 0.62 = $ 319355 2. Margin of Safety units = Current sales - Breakeven Units units = = m erin of of Safety (-/-) - 1570 - 639 931 Unity 931 unit Current sales - Breakeven sales * - Current saly 785000 - 3193.55 785000

Dete 0.5932 X 100 59.32% Current sales a 1570x500 = 785ooo 3. Target Sales units = Total fixed cost & Target Profit Selling Price - Variable cost 198000 + 130000 Soo-190 = 328000 310 = 1058 unity To calculate break even point dividle total fixed Cost by Contribution margin, cm is calculated by de ducting & variable Cost Per unit from Selling Price per unit. Breakeven point is sales is calculated by dividing total fixed cost by contribution margin Irratio, cm ratio is calculated by declecting Variable cost per unit from selling Price per unit and than dividing it with selling Price per unit. Margin of safety is calculated by ale clucting Breakeven from current level of sales. Target units is calculated by adding fixed cost & larger Profit & divice by contribution margin-

ekkarill92 answered 2 years ago
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