Question
In: Accounting
Contribution Margin, CVP, Net Income, Margin of Safety Nail Glow, Inc., produces novelty nail polishes. Each...
Contribution Margin, CVP, Net Income, Margin of Safety
Nail Glow, Inc., produces novelty nail polishes. Each bottle sells for $5.90. Variable unit costs are as follows:
Acrylic base $0.86
Bottle, packing material
$1.15
Pigments 0.57
Selling commission
0.14
Other ingredients 0.43
Fixed overhead costs are $34,475 per year. Fixed selling and
administrative costs are $6,720 per year. Nail Glow sold 35,000
bottles last year.
Required:
1. What is the contribution margin per unit for a bottle of nail
polish? Round your answer to the nearest cent.
$fill in the blank 1
per unit
What is the contribution margin ratio? Round your answer to four
decimal places. Use the rounded value in the subsequent
computations. (Express as a decimal-based amount rather than a
whole percent.)
fill in the blank 2
2. How many bottles must be sold to break even?
fill in the blank 3
bottles
What is the break-even sales revenue? Round your answer to the
nearest dollar, if rounding is required. Use the rounded value in
the subsequent computations.
$fill in the blank 4
3. What was Nail Glow’s operating income last year?
$fill in the blank 5
4. What was the margin of safety in revenue?
$fill in the blank 6
5. Suppose that Nail Glow, Inc., raises the price to $6.50 per
bottle, but anticipated sales will drop to 28,750 bottles. What
will the new break-even point in units be? Round your answer to the
nearest whole number of units.
fill in the blank 7
bottles
Should Nail Glow raise the price?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Contribution Margin, CVP, Net Income, Margin of Safety Nail Glow, Inc., produces novelty nail polishes. Each...
Contribution Margin, CVP, Net Income, Margin of Safety
Nail Glow, Inc., produces novelty nail polishes. Each bottle
sells for $5.90. Variable unit costs are as follows:
Acrylic base
$0.86
Bottle, packing material
$1.15
Pigments
0.57
Selling commission
0.14
Other ingredients
0.43
Fixed overhead costs are $34,475 per year. Fixed selling and
administrative costs are $6,720 per year. Nail Glow sold 35,000
bottles last year.
Required:
1. What is the contribution margin per unit for
a bottle of nail polish? Round...
P5-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...
P5-2A Prepare a
CVP income statement, compute break-even point, contribution margin
ratio, margin of safety ratio
and sales for target net income
Jorge Company bottles and
distributes B-Lite, a diet soft drink. The beverage is sold for 50
cents per 16-ounce bottle
to retailers, who charge
customers 75 cents per bottle. For the year 2017, management
estimates the following revenues
and costs.
Sales
$1,800,000
Selling expenses - variable
$70,000
Direct materials
430,000
Selling expenses - fixed
65,000
Direct labor...
P5-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...
P5-2A Prepare a CVP income statement, compute break-even point,
contribution margin ratio, margin of safety ratio and sales for
target net income Jorge Company bottles and distributes B-Lite, a
diet soft drink. The beverage is sold for 50 cents per 16-ounce
bottle to retailers, who charge customers 75 cents per bottle. For
the year 2017, management estimates the following revenues and
costs. Sales $1,800,000 Selling expenses - variable $70,000 Direct
materials 430,000 Selling expenses - fixed 65,000 Direct labor
360,000...
P5-3A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...
P5-3A Prepare a CVP income statement, compute break-even point,
contribution margin ratio, margin of safety ratio
and sales for target net income
Jorge Company bottles and distributes B-Lite, a diet soft drink.
The beverage is sold for 50 cents per 16-ounce bottle
to retailers. For the year 2020, management estimates the following
revenues and costs.
Sales
$1,800,000
Selling expenses - variable
$70,000
Direct materials
430,000
Selling expenses - fixed
65,000
Direct labor
360,000
Administrative expenses - variable
20,000
Manufacturing...
P18-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...
P18-2A Prepare a
CVP income statement, compute break-even point, contribution margin
ratio, margin of safety ratio
and sales for target net income
Jorge Company bottles and
distributes B-Lite, a diet soft drink. The beverage is sold for 50
cents per 16-ounce bottle
to retailers, who charge
customers 75 cents per bottle. For the year 2017, management
estimates the following revenues
and costs.
Sales
$1,800,000
Selling expenses - variable
$70,000
Direct materials
430,000
Selling expenses - fixed
65,000
Direct labor...
Discuss contribution margin, what it is and how it is presented in the CVP income statement
Discuss contribution margin, what it is and how it is presented
in the CVP income statement
Mastery Problem: Target Income and Margin of Safety Target Income and Margin of Safety At the...
Mastery
Problem: Target Income and Margin of Safety
Target Income
and Margin of Safety
At the break-even
point, sales and costs are exactly equal. However, the goal of most
companies is to make a profit. When a company decides that it wants
to earn more than the break-even point of income, it must define
the amount it thinks it will realistically make. By modifying the
break-even equation, the sales required to earn a target or desired
amount of profit may...
Mastery Problem: Target Income and Margin of Safety Target Income and Margin of Safety At the...
Mastery
Problem: Target Income and Margin of Safety
Target Income
and Margin of Safety
At the break-even
point, sales and costs are exactly equal. However, the goal of most
companies is to make a profit. When a company decides that it wants
to earn more than the break-even point of income, it must define
the amount it thinks it will realistically make. By modifying the
break-even equation, the sales required to earn a target or desired
amount of profit may...
Contribution Margin, Break-Even Units, Break-Even Sales, Margin of Safety, Degree of Operating Leverage Aldovar Company produces...
Contribution Margin, Break-Even Units, Break-Even Sales, Margin
of Safety, Degree of Operating Leverage
Aldovar Company produces a variety of chemicals. One division
makes reagents for laboratories. The division's projected income
statement for the coming year is:
Sales (203,000 units @ $70)
$14,210,000
Total variable cost
8,120,000
Contribution margin
$6,090,000
Total fixed cost
4,945,500
Operating income
$1,144,500
Required:
1. Compute the contribution margin per unit,
and calculate the break-even point in units. Calculate the
contribution margin ratio and use it to...
A. The Contribution Margin Income Statement has a higher Net Operating Income than the Absorption Costing...
A. The Contribution Margin Income Statement has a higher
Net Operating Income than the Absorption Costing Income Statement:
true or false
B. The horizontal line on the CVP Graph represents what
one?
fixed costs
total revenue
total expenses
Variable Cost
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