Question
In: Accounting
The Greenback Store’s cost structure is dominated by variable costs with a contribution margin ratio of...
The Greenback Store’s cost structure is dominated by variable costs with a contribution margin ratio of 0.40 and fixed costs of $95,400. Every dollar of sales contributes 40 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $307,400. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $530,000 for the month. Required: a. Compare the two companies’ cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company’s profits increase?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Spring Company’s cost structure is dominated by variable costs with a contribution margin ratio of 0.25...
Spring Company’s cost
structure is dominated by variable costs with a contribution margin
ratio of 0.25 and fixed costs of $20,000. Every dollar of sales
contributes 25 cents toward fixed costs and profit. The cost
structure of a competitor, Winters Company, is dominated by fixed
costs with a higher contribution margin ratio of 0.70 and fixed
costs of $200,000. Every dollar of sales contributes 70 cents
toward fixed costs and profit. Both companies have sales of
$400,000 per month.
Required:...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost
per Unit, Contribution Margin, Contribution Margin Ratio, Fixed
Expense
For each of the
following independent situations, calculate the amount(s)
required.
Required:
1. At
the break-even point, Jefferson Company sells 85,000 units and has
fixed cost of $348,600. The variable cost per unit is $0.35. What
price does Jefferson charge per unit? Note: Round to the
nearest cent.
$
2.
Sooner Industries charges a price of $127 and has fixed cost of
$360,500. Next year, Sooner expects to...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost per Unit, Contribution Margin, Contribution
Margin Ratio, Fixed Expense
For each of the following independent situations, calculate the
amount(s) required.
Required:
1. At the break-even point, Jefferson Company
sells 95,000 units and has fixed cost of $349,700. The variable
cost per unit is $0.15. What price does Jefferson charge per unit?
Note: Round to the nearest cent.
$
2. Sooner Industries charges a price of $129
and has fixed cost of $421,000. Next year, Sooner expects to...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost per Unit, Contribution Margin, Contribution
Margin Ratio, Fixed Expense
For each of the following independent situations, calculate the
amount(s) required.
Required:
1. At the break-even point, Jefferson Company
sells 85,000 units and has fixed cost of $351,900. The variable
cost per unit is $0.30. What price does Jefferson charge per unit?
Note: Round to the nearest cent.
$
2. Sooner Industries charges a price of $136
and has fixed cost of $391,500. Next year, Sooner expects to...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost per Unit, Contribution Margin, Contribution
Margin Ratio, Fixed Expense
For each of the following independent situations, calculate the
amount(s) required.
Required:
1. At the break-even point, Jefferson Company
sells 85,000 units and has fixed cost of $346,500. The variable
cost per unit is $0.10. What price does Jefferson charge per unit?
Note: Round to the nearest cent.
$
2. Sooner Industries charges a price of $98 and
has fixed cost of $476,500. Next year, Sooner expects to...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost per Unit, Contribution Margin, Contribution
Margin Ratio, Fixed Expense
For each of the following independent situations, calculate the
amount(s) required.
Required:
1. At the break-even point, Jefferson Company
sells 115,000 units and has fixed cost of $346,800. The variable
cost per unit is $0.10. What price does Jefferson charge per unit?
Note: Round to the nearest cent.
$
2. Sooner Industries charges a price of $116
and has fixed cost of $395,500. Next year, Sooner expects to...
Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...
Price, Variable Cost per Unit, Contribution Margin, Contribution
Margin Ratio, Fixed Expense
For each of the following independent situations, calculate the
amount(s) required.
Required:
1. At the break-even point, Jefferson Company
sells 85,000 units and has fixed cost of $349,900. The variable
cost per unit is $0.20. What price does Jefferson charge per unit?
Round to the nearest cent.
$
2. Sooner Industries charges a price of $93 and
has fixed cost of $481,500. Next year, Sooner expects to sell...
Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 18,000 T-shirts at $21...
Variable Costs, Contribution Margin, Contribution Margin
Ratio
Super-Tees Company plans to sell 18,000 T-shirts at $21 each in
the coming year. Product costs include:
Direct materials per T-shirt $7.35
Direct labor per T-shirt $1.47
Variable overhead per T-shirt $0.63
Total fixed factory overhead $40,000
Variable selling expense is the redemption of a coupon, which
averages $1.05 per T-shirt; fixed selling and administrative
expenses total $19,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round...
Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 18,000 T-shirts at $21...
Variable Costs, Contribution Margin, Contribution Margin
Ratio
Super-Tees Company plans to sell 18,000 T-shirts at $21 each in
the coming year. Product costs include:
Direct materials per T-shirt
$7.35
Direct labor per T-shirt
$1.47
Variable overhead per T-shirt
$0.63
Total fixed factory overhead
$43,000
Variable selling expense is the redemption of a coupon, which
averages $1.05 per T-shirt; fixed selling and administrative
expenses total $11,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round...
Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 10,000 T-shirts at $24...
Variable Costs, Contribution Margin, Contribution Margin
Ratio
Super-Tees Company plans to sell 10,000 T-shirts at $24 each in
the coming year. Product costs include:
Direct materials per T-shirt $8.40
Direct labor per T-shirt $1.68
Variable overhead per T-shirt $0.72
Total fixed factory overhead $40,000
Variable selling expense is the redemption of a coupon, which
averages $1.20 per T-shirt; fixed selling and administrative
expenses total $15,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round...
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