Wayne’s Workshop shows average revenue per customer of $400. Monthly fixed costs are $40,000. Variable costs...

Wayne’s Workshop shows average revenue per customer of $400. Monthly fixed costs are $40,000. Variable costs in the last month were in total $32,000. During that month the workshop had 1,200 customers.

Required

1. Calculate the contribution margin ratio.

2. Calculate the breakeven point.

3. What was the profit last month?

4. Prepare an income statement for last month using the contribution format.

5. What was the operating leverage?

6. Using the operating leverage formula, calculate the new operating income if sales fall by 5%.

Solutions

Expert Solution

ekkarill92 answered 9 months ago

Next > < Previous

Related Solutions

At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are...

At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units. a. How much would absorption costing operating income differ between a plan to produce 8,000 units and a plan to produce 10,000 units? b. How much would variable costing operating income differ between the two production plans?

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable...

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable Cost $ Average Total Cost $ Marginal Cost$ 0 0 1 12 2 20 3 24 4 27 5 40 6 65 7 98 Assume that the fixed cost is $80, calculate the above costs in the table and explain the difference between average total costs and marginal costs. In a graph illustrate the Average Total Cost and Marginal Cost Curves, explain their relationship....

Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Fixed Costs ATC Average Fixed Costs Average...

Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost Fixed Costs ATC Average Fixed Costs Average Variable Costs 0 0 - 10 - 10 - - - 1 8 24 14 24 2 16 34 10 17 3 24 42 8 14 4 32 49 7 12.25 5 40 57 8 11.4 6 48 67 10 11.17 7 56 81 14 11.57 8 64 99 18 12.38 9 72 123 24 13.67 1b. At a price of $14, what is...

Metal Industries has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each...

Metal Industries has monthly fixed costs totaling $90,000 and variable costs of $5 per unit. Each unit of product is sold for $20. Assume the company expects to sell 11,850 units of product this coming month. What is the margin of safety in units? Group of answer choices 8,850 6,600 5,850 7,350 Photos Inc. produces two different products with the following monthly data for June: Digital Camera Cameras Cases Total Selling price per unit $300 $100 Variable cost per unit...

a) Find ABC’s average fixed costs, average variable costs, average total costs and marginal costs.

Quantity Total Fixed Cost Total Variable Cost 0 100 0 1 100 50 2 100 70 3 100 90 4 100 140 5 100 200 6 100 360 a) Find ABC’s average fixed costs, average variable costs, average total costs and marginal costs. b) Since ABC is charging the customers at the price of $50, it seems that the company cannot make a profit. The owner decides to shut down operations. What are ABC’s profits/losses? Should the owner shut down...

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed...

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed costs are $125,800. a. What is the break-even point in units? b. What unit sales would be required to earn a target profit of $321,900? c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 decimal places.) d. If sales decrease by 30% from that level, by what percentage...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed costs are $75000. answer following questions. a) what is break even points in units? b) what unit sales would be required to earn a profit target of $200,000 c) assume they achieve the sales required in part b what is the degree of operating leverage? d) if sales decrease by 30% from that level by what percentage will profits decrease?

Jim runs a nursery. Identify the following costs he faces as fixed costs, average fixed costs, variable costs, average variable costs, total costs, average total costs, or marginal costs:

Jim runs a nursery. Identify the following costs he faces as fixed costs, average fixed costs, variable costs, average variable costs, total costs, average total costs, or marginal costs:a) The rent he pays on his greenhouse in the short runb) The rent he pays on his greenhouse in the long runc) the cost of soil, water, and seeds in the short rund) the per-unit cost of producing a nursery plant in the short rune) the opportunity cost of shutting the...

SUMMARIZE YOUR CALCULATIONS AND USE MICROSOFT EXCEL. DRAW ONE GRAPH SHOWING AVERAGE FIXED COSTS, AVERAGE VARIABLE COSTS, AVERAGE TOTAL COSTS, MARGINAL REVENUE AND MARGINAL COSTS.

OUTPUT AVERAGE FIXED COST AVERAGE VARIABLE COST AVERAGE TOTAL COST 0 1 $180.00 $135.00 $315.00 2 $90.00 $127.50 $217.50 3 $60.00 $120.00 $180.00 4 $45.00 $112.50 $157.50 5 $36.00 $111.00 $147.00 6 $30.00 $112.50 $142.50 7 $25.71 $115.70 $141.41 8 $22.50 $121.90 $144.40 9 $20.00 $130.00 $150.00 10 $18.00 $139.50 $157.50 OUTPUT MARGINAL COST PRICE TOTAL REVENUE TOTAL REVENUE 0 $345.00 1 $300.00 2 $249.00 3 $213.00 4 $189.00 5 $165.00 6 $144.00 7 $126.00 8 $111.00 9 $99.00 10...

Monthly fixed cost: 10 000,- Variable cost: 15,-/customer Volume: 1 500 customers per month Price: 25,-/customer...

Monthly fixed cost: 10 000,- Variable cost: 15,-/customer Volume: 1 500 customers per month Price: 25,-/customer When business started, there came only 800 customers/month. However, fixed cost was only 5000,-. a)Break-even? b)Profit? c)How much should the price be to reach the original target in this situation with 800 customers?

Subjects