Question

In: Accounting

Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074,...

Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074, (3) the contribution margin ratio = 33%, and (4) net operating income = $10,000. Given these four assumptions, unit sales must be:
Multiple Choice

1,139 units.

561 units.

2,278 units.

1,700 units.

Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) the total fixed expenses = $15,400, and (4) net operating income = $17,900. Given these four assumptions, unit sales must be:

Multiple Choice

1,873 units.

2,775 units.

1,200 units.

3,330 units.

Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) unit sales = 2,250, and (4) total fixed expenses = $25,000. Given these four assumptions, net operating income must be:

Multiple Choice

$2,000.

$4,250.

$31,250.

$27,250.

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $38,000 and $42,000, respectively. It also expects credit sales of $58,000 and $68,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale, 35% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company’s cash budget for the second month?

Multiple Choice

$100,200

$103,100

$91,800

$40,800

Solutions

Expert Solution

Question 1

Contribution per unit =Sales per unit × Contribution margin ratio

= 34 × 33%

= $ 11.22

Net operating income = Contribution -Fixed cost

Contribution = Fixed cost + Net operating income

Let N be the number of units sold

11.22N = 10000 + 9074

N = 19074 ÷ 11.22

Number of units sold = 1700 units

Question 2

Let N be the number of units sold

Sales = Net operating income + Variable cost + Fixed cost

25N = 17900 + 15400 + 13N

12N = 33300

N = 33300 ÷ 12

Number of units sold = 2775 Units

Question 3

Net operating income = Sales - Variable cost - Fixed cost

= (25×2250) - (13×2250) - 25000

= $ 2000

Question 4

Cash sales in second month = $ 42000

Credit sales collected in second month :

Collection of first month = 58000 × 35%

= $ 20300

Collection of second month = 68000 × 60%

= $ 40800

Total credit sales collected = $ 61100

Total collections = $ 103100

  

ekkarill92 answered 1 year ago
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