Question
In: Accounting
Sales (4,000 units) $200,000 Variable expenses 110,000 Contribution margin 90,000 Fixed expenses 48,000 Net operating income...
| Sales (4,000 units) | $200,000 | |
| Variable expenses | 110,000 | |
| Contribution margin | 90,000 | |
| Fixed expenses | 48,000 | |
| Net operating income | $42,000 |
A)What is the contribution margin per unit?
B)What is the contribution margin ratio?
C)What is the variable expense ratio?
D) If sales increase to 6,050 units, what would be the estimated net operating income?
E) If the selling price decreases by $4 per unit and the sales volume increases by 200 units, what would be the estimated net operating income?
F) If the variable cost per unit decreases by $5, spending on advertising increases by $4,000, and unit sales increase by 450 units, what would be the estimated net operating income?
G) What is the break-even point in dollar sales?
H) Estimate how many units must be sold to achieve a target profit of $60,000.
Solutions
Expert Solution
| Total | Per units | ||
| Sales (4,000 units) | $200,000 | $50.00 | =200000/4000 |
| Variable expenses | $110,000 | $27.50 | =110000/4000 |
| Contribution Margin | $90,000 | $22.50 | =90000/4000 |
| Fixed Expense | $48,000 | ||
| Net Operating Profit | $42,000 |
| Answer A. |
| Contribution Margin Per unit = Contribution margin / Total no of units |
| =$90,000 / 4,000 units |
| =$22.5 per unit |
| Answer B. |
| Contribution Margin ratio = (Contribution margin / Sales ) * 100 |
| =($90,000 / $200,000) * 100 |
| =45% |
| Answer C. |
| Variable Expense Ratio = (Variable expense / Sales ) * 100 |
| =($110,000 / $200,000) * 100 |
| =$55% |
| Answer D. | ||
| Computation of Estimated Profit if Sales increase to 6,050 units | ||
| Sales (6,050 units) | $302,500 | =6050 * $50 |
| Less: Variable Cost | $166,375 | =6050 * $27.5 |
| Contribution Margin | $136,125 | |
| Fixed Expense | $48,000 | |
| Net Operating Profit | $88,125 | |
| Answer E. | ||
| Computation of Estimated Net Operating income | ||
| Sales (4,200 units) | $193,200 | =4200 * $46 |
| Less: Variable Cost | $115,500 | =4200 * $27.5 |
| Contribution Margin | $77,700 | |
| Fixed Expense | $48,000 | |
| Net Operating Profit | $29,700 | |
| Answer F. | ||
| Computation of Estimated Net Operating income | ||
| Sales (4,450 units) | $222,500 | =4450 * 50 |
| Less: Variable Cost | $100,125 | =4450 * ($27.5 - $5) |
| Contribution Margin | $122,375 | |
| Fixed Expense | $52,000 | |
| Net Operating Profit | $70,375 |
| Answer G. |
| Break Even point in dollar sales = Fixed Cost / Contribution margin ratio |
| =$48,000 / 45% |
| =$106,666 |
| Answer H. |
| Computation of units sold to achieve $60,000 profit |
| Units to be sold to achieve desired profit = (Fixed Expenses + Desired Profit ) / Contribution Margin per unit |
| =($48,000 + $60,000) / $22.5 |
| =4,800 units |
ekkarill92 answered 1 year agoRelated Solutions
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Variable expenses ………………………
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Contribution margin
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unit sales and dollar sales.
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1.60
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$
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