I just need help on 5 & 6 please. Thank you!
lution 1:
CM ratio = Contribution margin / Sales = $1,620,000 / $3,240,000 =
50%
Solution 2:
Break even Point in dollar sales = Fixed costs / contribution
margin ratio = $160,000 / 50% = $320,000
Solution 3:
If sales increases by $57,000, then increase in net operating
income = $57,000 * 50% = $28,500
Solution 4a:
Degree of operating leverage based on last year sales =
contribution margin / net operating income
= $1,620,000 / $1460,000 = 1.11
Solution 4b:
% increase in net operating income = % increase in sales * Degree
of operating leverage
= 18% * 1.109589 = 19.97%
Solution 5a:
New selling price per unit = $120 * 89% = $106.80
New Fixed costs = $160,000 + $64,000 = $224,000
New sales volume = ($3,240,000/$120)*125% = 33750 units
Solution 5b:
Increase or decrease in net operating income = $1355500 - 1460000 = - $104,500 (decrease)
Solution 6:
If sales commission increased by $1.50 per unit then new
contribution margin per unit = $120 - $60 - $1.50 = $58.50 per
unit
New sales volume = 27000*125% = 33750 units
Target operating income = $1,460,000
Maximum fixed costs = Total contribution margin - target operating
income
= (33750 * $58.50) - $1460,000 = $514,375
Existing fixed costs = $160,000
The amount by which advertising can be increase is =
$514375 - $160,000 = $354,375
I just need help on 5 & 6 please. Thank you! Feather Friends, Inc., distributes a...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc, distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
I need help with questions 5 - 6. Thank you! Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3, 120,000 1,560,000 1,560,000 200,000 $ 1,360,000 Required: Answer each question independently based on the original data: 1. What is the product's CM...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Rectangular Snip Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the...
Please help me solving the Question Number 5(a), 5(b) and 6. Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,000,000 1,500,000 1,500,000 160,000 $ 1,340,000 Required: Answer each question independently based on the original data: 1. What is the product's CM...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales $ 3,240,000 Variable expenses 1,620,000 Contribution margin 1,620,000 Fixed expenses 200,000 Net operating income $ 1,420,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
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Just question 5-6 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales $ 1,040,000 Variable expenses 520,000 Contribution margin 520,000 Fixed expenses 200,000 Net operating income $ 320,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3, 240,000 1,620,000 1,620,000 180,000 $ 1,440,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even...