Question

In: Accounting

Suppose Zume's sales price is 19, variable cost per unit is 8, and fixed cost is...

Suppose Zume's sales price is 19, variable cost per unit is 8, and fixed cost is 416. Zume sells 1500 pizzas. What is Zume’s Margin of Safety in sales dollars? (HINT: Use Contribution Margin Ratio). (Round ONLY you final answer to 2 digits...keep at least 3 digits on CM ratio during calculations )

Solutions

Expert Solution

Calculation of Margin of safety in dollars:
Contribution per unit= selling price- variable cost
                             =19-8= $11
Contribution margin ratio= Contribution/selling price*100
                                   = 11/19*100= 57.895%
Break even point in dollars= Fixed cost/ contribution margin ratio
                                     =416/0.57895= $718.54
margin of safety in dollars= Total sales- break even sales
                                     =(1500*19)-718.54
                                     =28500-718.54= $27781.46
Margin of safety in dollar= $27781.46

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

If the unit sales price is $12, the unit variable cost is $7.00 and fixed costs...
If the unit sales price is $12, the unit variable cost is $7.00 and fixed costs are $125,000; what is the, break-even quantity in # of units? ___________________________________ Please Show steps
Sales price P15 per unit Variable costs: SG&A P2 per unit Production P4 per unit Fixed...
Sales price P15 per unit Variable costs: SG&A P2 per unit Production P4 per unit Fixed costs (total cost incurred for the year): SG&A P14,000 Production P20,000 During the first year, Sherrill Corporation manufactured 5,000 units and sold 3,800. There was no beginning or ending work-in-process inventory. 1. How much income before income taxes would be reported if Stanley uses absorption costing? 2. How much income before income taxes would be reported if variable costing was used? 3. Show why...
Given the following Selling Price: 50$ per unit Variable Cost: 40$ per unit Fixed Cost: 80,000$...
Given the following Selling Price: 50$ per unit Variable Cost: 40$ per unit Fixed Cost: 80,000$ per unit Calculate: A. Contribution margin as well as the contribution margin ratio B. Profit(loss) if 7,200 units are sold C. Margin of safety if 10,100 units are sold D. Break even point in dollars
A firm’s fixed cost $50,000 and its variable cost is $3 per unit. The selling price...
A firm’s fixed cost $50,000 and its variable cost is $3 per unit. The selling price $5 per unit. The management is considering two projects but only one would be selected. Project A will result in an increase in fixed cost, which will amount to $150,000 and a decrease in variable cost which fall to $2. Project B is less ambitious undertaking that results in fixed costs increasing to $70,000 and variable costs decreasing to $2.30 per unit. Currently 55,000...
19) If fixed costs are $274,000, the unit selling price is $124, and the unit variable...
19) If fixed costs are $274,000, the unit selling price is $124, and the unit variable costs are $79, the break-even sales (units) is a.3,468 units b.1,350 units c.6,089 units d.2,210 units 18) Strait Co. manufactures office furniture. During the most productive month of the year, 3,400 desks were manufactured at a total cost of $83,000. In the month of lowest production, the company made 1,140 desks at a cost of $64,400. Using the high-low method of cost estimation, total...
Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs...
Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs [LO5-1, LO5-4] Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (36,000 units) $ 252,000 $ 7.00 Variable expenses 144,000 4.00 Contribution margin 108,000 $ 3.00 Fixed expenses 49,000 Net operating income $ 59,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 15%? 2. What...
variable cost per unit 3, sales per unit 46, fixed exp $3000 and beginning cash $1500....
variable cost per unit 3, sales per unit 46, fixed exp $3000 and beginning cash $1500. 1. is there any limit to how much units you can produce given the data here 2. what principle of economics dictates your answer in question 1 3. what is the walmart effect? 4. what is a monopsony?
Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and...
Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price per unit Variable Cost per unit Contribution Margin per unit X $1,248 $468 $780 Y 473 253 220 The sales mix for products X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y combined. Round answer to nearest whole number. units...
Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and...
Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price per unit Variable Cost per unit Contribution Margin per unit X $1,248 $468 $780 Y 473 253 220 The sales mix for products X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y combined. Round answer to nearest whole number. units
show the fixed cost are fixed in total but is variable on a per unit basis...
show the fixed cost are fixed in total but is variable on a per unit basis and that variable in total but is fixed on a per unit basis
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT