Question

Complete question 1 through A to D

Part A. Dairy Days Ice Cream sells ice cream cones for $4.00 per customer. Variable costs are $2.00 per cone. Fixed costs are $2,400

per month. What is Dairy​ Days' contribution margin​ ratio?

A.252​%

B.75​%

C.58​%

D.50​%

Part B. The managerial accountant at Right Stripes T−Shirt Company reported the following​ information:   The Right Stripes T−Shirt Company Contribution Margin Income Statement

Sales Revenue 1818 × units	$17,100
Variable Expenses	$9,900
Contribution Margin	​$_____
Fixed Expenses	$6,700
Operating Income	$500

How many units did Right Stripes T−Shirt Company sell to achieve the above listed​ revenue? Compute the​ company's contribution margin.

.

A. 34 ​units; $1.73

B. 13.4 ​units; $27,000

C. 550 ​units; $ 7,200

D. 950 units; $7,200

The following information pertains to the Flying Fig​ Corporation:

Total Units for information given	6,000
Fixed Cost per Unit	$50
Selling Price per Unit	$425
Variable Costs per Unit	$200
Target Operating Income	$150,000

What is the breakeven in​ units? (Round your final calculation to the nearest​ unit.)

A 2,000 units

B. 1,500 units

C. 1,333 units

D. 667 units

Part D Matthew's Fish Fry has a monthly target operating income of​ $8,300. Variable expenses are​ 80% of sales and monthly fixed expenses are​ $800. What is the monthly margin of safety as a percentage of target sales in​ dollars?

A. ​108.79%

B. ​20.00%

C.​1,037.50%

D. ​91.21%

Answer 1

Question -1 : Part - A.

Answer : D = 50 %.

>> Contribution margin per unit = Selling price - Variable cost

>> Contribution margin per unit = $ 4 - $ 2

>> Contribution margin per unit = $ 2.

>> Contribution margin ratio = ( Contribution margin per unit * 100 ) / Selling price

>> Contribution margin ratio = ( $ 2 * 100 ) / $ 4

>> Contribution margin ratio = 50 %.

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Question -1 : Part - B.

Answer : D = 950 units and contribution margin = $ 7,200.

>> Contribution margin = Fixed cost + Profit

>> Contribution margin = $ 6,700 + $ 500

>> Contribution margin = $ 7,200.

>> Units sold = Sales / Selling price = $ 17,100 / 18 = 950 Units.

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Question -1 : Part - C.

Answer : C = 1,333 Units

>> Fixed cost = 6,000 * $ 50 = $ 300,000.

>> Contribution margin per unit = Selling price - Variable cost

>> Contribution margin per unit= $ 425 - $ 200

>> Contribution margin per unit= $ 225.

>> Break even units = Fixed cost / Contribution margin per unit

>> Break even units = $ 300,000 / $ 225

>> Break even units = 1333 Units

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Question -1 : Part - D.

Answer : D = 91.21 %

>> Contribution margin ratio = 100 % - Variable cost %

>> Contribution margin ratio = 100 % - 80 %

>> Contribution margin ratio = 20 %.

>> Contribution margin = Fixed cost + Profit

>> Contribution margin = $ 800 + $ 8300

>> Contribution margin = 9,100.

>> Sales = Contribution margin / CM Ratio = $ 9,100 / 20 % = $ 45,500.

>> Break even sales = Fixed cost / Contribution margin ratio

>> Break even sales = $ 800 / 20 %

>> Break even sales = $ 4000.

>> Margin of safety sales = Actual sale - Break even sale

>> Margin of safety sales = $ 45,500 - $ 4,000

>> Margin of safety sales = $ 41,500

>> Margin of safety sales % = ( $ 41,500 * 100 ) / 45,500

>> Margin of safety sales % = 91.21 %

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