Homework Answers
AS PER HOMEWORKLIB POLICY I'VE ANSWERED 1ST FOUR PARTS OF THE QUESTION. KINDLY POST THE SAME QUESTION ONCE AGAIN ASKING TO SOLVE THE REMAINING PORTION.
Requirement #1)
Contribution = Selling Price - Variable cost
Contribution Ratio =( Contribution / Sales) x 100
| Current | Alternative 1 | Alternative 2 | Alternative3 | |
| Unit Selling Price | $60 | $60 |
$64.80 (64+64*0.08) |
$60 |
| Unit Variable Cost | $48.60 |
$47.40 (48.60-1.20) |
$48.60 |
$53.46 (48.60+48.60*0.10) |
| Unit Contribution Margin | $11.40 | $12.60 | $16.20 | $6.54 |
| Contribution Margin Ratio | 19% | 21% | 25% | 10.90% |
| Fixed Cost | $639100 | $659100 | $830830 | $319550 |
Income Statement of 70000 Widgets
| Current | Alternative 1 | Alternative2 | Alternative3 | |
| Contribution | 798000 | 882000 | 1134000 | 457800 |
| Fixed Cost | 639100 | 659100 | 830830 | 319550 |
| Profit | $158900 | $222900 | $303170 | $138250 |
Requirement #2)
a) Income Statement of Sale of 60000 Widgets on Alternative #1
| Particulars | 60000 Widgets |
| Contribution | 756000 (60000*12.60) |
| Fixed Cost | 659100 |
| Profit | $96900 |
b) Break Even Point- current scenario
Break Even Units = Fixed Cost/Contribution per unit
= 639100/11.40
= 56062 Widgets
Break Even Point in dollar = Fixed Cost/ Contribution Ratio
= 639100/19%
= $3363684 or $3363720
c) Break Even Point of Alternative 1
Break even Units = 659100/12.60 = 52310 Units
Break even point in dollar = 52310*60 = $3138600
d) Break Even Point in Alternative 2
Break Even Units = 830830/16.20 = $51286
Break Even Point in dollar = 51286*64.80 = $3323332.80
ANY DOUBTS OR CORRECTIONS?
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