pls do e,f,g 2. Cutlass Company's projected profit for the coming year is as follows: Total...

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2. Cutlass Companys projected profit for the coming year is as follows: Total Per Unit Sales Total variable cost $200,000 | e. Using the contribution margin ratio computed in Requirement 1, compute the additional profit that Cutlass would earn if sa

pls do e,f,g

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Answer 1

Answer #1

A) VARIABLE COST RATIO=TOTAL VARIABLE COST/TOTAL SALES

120000/200000=0.6

B) CONTRIBUTION MARGIN RATIO=CONTRIBUTION MARGIN/SALES

CONTRIBUTION MARGIN=SALES-VARIABLE COST

=200000-120000

80000

CONTRIBUTION MARGIN RATIO=80000/200000

0.4

C) BREAK EVEN POINT IN SALES=FIXED COST*SALES/CONTRIBUTION

=64000*200000/80000

160000

D) SALES TO EARN A PROFIT OF 30000=(F+P)*S/C

=(64000+30000)*200000/80000

=235000

E)IF SALES WERE 25000 MORE THAN GIVEN, THEN THE PROFIT WILL BE

SALES 225000

VARIABLE COST

CONTRIBUTION WILL BE 225000-135000=90000

CONTRIBUTION MARGIN WILL BE 90000/225000=.4

CONTRIBUTION -FIXED COST=PROFIT

90000-64000=26000

MARGIN OF SAFETY=PROFIT*SALES/CONTRIBUTION

16000*200000/80000

=40000 (SALES )

16000/80000=0.2 (UNITS)

DEGREE OF OPERATING LEVERAGE

=QUANTITY*(PRICE-VARIABLE COST PER UNIT)/QUANTITY*(PRICE-VARIABLE COST PER UNIT)-FIXED OPERATING COST

10000(20-12)/10000(20-12)-64000

=80000/16000=5

30% INCREASE IN SALES

CURRENT SALES VALUE IS 200000

30% INCREASE= 260000

VARIABLE COST=60000/20=3000*12=36000+120000

156000

CONTRIBUTION=260000-156000

104000

(-)FIXED COST=64000

PROFIT =40000

% CHANGE IN OPERATING PROFIT=40000-16000=24000

= ( 24000/16000)*100

= 150

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