Question

Big Chill, Inc. sold 151,575 portable dehumidifier units at $135. Unit variable costs were $74. Fixed costs were $3,966,300. At this price and volume, what was the firm's return on sales? Report your answer as a percentage and round to the nearest whole number.

Big Chill, Inc. sells portable dehumidifier units at $187. Unit variable costs are $116. Fixed costs are $4,175,000. Management has set a profit objective of 15.6% return on sales. Calculate the sales volume in dollars that will provide a 15.6% return on sales. Round your answer to the nearest dollar.

Maybelline recently introduced a high-end lip balm called Baby Lips. The national target market is female, age 24 – 34, income $45,000 and higher. The current price is $4.70. Fixed costs are estimated at $8,775,000. Variable costs are currently $2.35. Maybelline believes that it can reduce cost of goods sold, due to favorable contract negotiations with ingredient suppliers for shea butter, centella and anti-oxidants. As a result, variable costs are predicted to decline by $0.30. Maybelline is debating whether to pass the cost savings on to the consumer or to maintain the current price. What would be the change in Maybelline's breakeven volume (in tubes, +/-) if the company maintains the current price? Round your answer to the nearest whole number.

Answer 1

1.

Sales Revenue	$ 20,462,625
Variable Costs	$ 11,216,550
Contribution Margin	$    9,246,075
Fixed Costs	$    3,966,300
Net Operating Income	$    5,279,775

Return on Sales = $5279775/20462625 x 100 = 25.80% or 26%

2.
Contribution Margin per unit = $187-116 = $71 per unit
Let Sales volume be x units

Income = Contribution Margin - Fixed Costs
$187x X15.6% = $71x - $4175000
x = 99814 units
Sales volume in dollars = 99814 x $187 = $18,665,218

As per HOMEWORKLIB RULES, we are suppose to answer 1 question, i have answered 2 ,so kindly post other question separately