Question

1. Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs.

solve:
A. Contribution margin per unit is:
B. Breakeven point in unit is:
C. The number of units that must be sold to achieve 60,000 of operating income
D. If sales increase by 25,000, operating income will increase by:

2. Schuppener Company sells its only product for $18 per unit, variable production costs are $6 per unit, and selling and administrative costs are $3 per unit. Fixed costs for 10,000 units are $10,000.

3. Fixed costs equal $12,000, unit contribution margin equals $20, and the number of units sold equal 1,600. Operating income is:

4. If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is:

5. At the breakeven point of 200 units, variable costs total $400 and fixed costs total $600. The 201st unit sold will contribute ______ to profits

Answer 1

1. A

Contribution Margin per unit : [sales – variable cost]/Number of units sold

[$70,000- $28000]/ 7000 units

$6 per unit

B Breakeven point is

Fixed cost/ Contribution Margin per unit = 12000/$6 per unit= $2000 units

Net profit + Fixed asset = selling price per unit – Variable cost per unit

$60000+$12000 = 10X-4X

6X = $72000

X = 12000 units

$95000-$28000- $12000= $55000

Increase in operating income by $55000- $40000 = $15000

        2 Contribution Margin will be

Selling price per unit -variable cost per unit – Selling and administrative cost per unit

$18-$6-$3 = $ 9 per unit

       3

Operating income

Total contribution Margin = $20*1600 =$32000

Operating income = $32000- $12000 = $20,000

       Net income = $40000 (1-0.30)= $28000