1) | |
Break-even point in units | 4,160 |
Break-even point in dollars | $416,000 |
2) | |
Margin of safety | $104,000 |
Margin of safety ratio | 20% |
Working notes:
1)
Break-even point in units = Fixed cost / Contribution margin per unit
Contribution margin = Operating income + Fixed cost
= $26,000 + $104,000
= $130,000
If sales is 100%
Contribution margin ratio (given) is 25%
Variable cost to sales ratio is 75% (100% - 25%)
If contribution margin is $130,000 at 25%
Sales at 100% is $520,000 (100 * $130,000 / 25)
Sales in units = $520,000/$100 per unit
= 5,200 units
Contribution margin per unit = $130,000/5,200 units
= $25 per unit
Therefore, Break-even point in units = $104,000/$25 per unit
= 4,160 units
Hence, break-even point in units is 4,160.
Break-even point in dollars = Fixed cost / contribution margin ratio
= $104,000/0.25
= $416,000
Therefore, break-eve point in dollars is $416,000.
2)
Margin of safety = Total sales revenue - Break-even point in dollars
= $520,000 - $416,000
= $104,000
Therefore, margin of safety is $104,000.
Margin of Safety ratio = Margin of safety / Total sales * 100
= $104,000 / $520,000 * 100
= 20%
Therefore, margin of safety ratio is 20%.
Current operating income for Bay Area Cycles Co. is $26,000. Selling price per unit is $100,...
Current operating income for Bay Area Cycles Co. is $26,000. Selling price per unit is $100, the contribution margin ratio is 25%, and fixed expense is $104,000. Required: Calculate Bay Area Cycle’s per unit variable expense and contribution margin. How many units are currently being sold? How many additional unit sales would be necessary to achieve operating income of $65,000?
please complete the entire question, try and use the same format if
possible
Current operating income for Bay Area Cycles Co. is $44,000. Selling price per unit is $100, the contribution margin ratio is 20%, an fixed expense is $176,000. Required: 1. Calculate Bay Area Cycle's breakeven point in units and total sales dollars. Break-even units Break-even dollars 2. Calculate Bay Area Cycle's margin of safety and margin of safety ratio. Margin of safety Margin of safety ratio-
Problem 11-4 NYM Manufacturing Company makes a product. Selling Price per unit Variable manufacturing cost per unit Variable selling expense per unit (sales commissions) Annual Fixed Manufacturing Costs Annual Fixed Selling and Admin Costs 150 80 25 40,000 s 60,000 REQUIRED Determine the break-even point in units and dollars using the following approaches. 1 Equation method 2 Contribution margin per unit. 3 Contribution margin ratio. 4 Confirm your results by preparing a contribution margin income statement for the breakeven sales...
Chapter 5: Applying Excel Data Unit sales 20,000 units $60 Selling price per unit Variable expenses per unit Fixed expenses per unit $45 per unit $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relations hips Compute the CM ratio and variable expense ratio Selling price per unit Variable expenses per unit Contribution margin per unit ? per unit ? per unit ? per unit CM ratio Variable expense ratio ? Compute...
1 Given the following information complete a CV analysis 2 for JPL, Inc.: 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 11,200 units $75 per unit $45 per unit $210,000 9 Use the data to answer the following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit 13 Variable expenses per unit 14 Contribution margin per unit per unit per unit per unit 16 CM ratio 17 Variable...
Majid Corporation sells a product for $135 per unit. The product's current sales are 41,100 units and its break-even sales are 32,115 units. What is the margin of safety in dollars? A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold Sales revenue Variable manufacturing expense Fixed manufacturing expense Variable selling and administrative expense Fixed selling and administrative expense Net operating income 310,000 $ 1,940,000 $ 959,000 $ 264,000 $ 357,000 $ 230,000 $ 130,000 The...
3 (a) Calculate variable cost per unit. Current Designs.xls Data Review View Home Insert Page Layout Formulas Kevlar Kevlar Resin and supplies Finishing kit (seat, rudder, ropes, etc.) Labor Selling and administrative expenses - variable Total variable costs per unit 2 Resin and supplies 3 Finishing kit (seat, rudder, ropes, etc.) 4 Labor 5 Selling and administrative expenses variable 6 Selling and administrative expenses—fixed 7 Manufacturing overhead-fixed $250 per kayak $100 per kayak $170 per kayak $420 per kayak $400...
Monterey Co. makes and sells a single product. The current selling price is $15 per unit. Variable expenses are $9 per unit, and fixed expenses total $31,900 per month. (Unless otherwise stated, consider each requirement separately.) a. Calculate the break-even point expressed in terms of total sales dollars and sales volume. (Do not round intermediate calculations.) break even sales = break even volume = units b. Calculate the margin of safety and the margin of safety ratio. Assume current sales...
Exercise 5-12 In 2019, Ivanhoe Company had a break-even point of $310,000 based on a selling price of $8 per unit and fixed costs of $93,000. In 2020, the selling price and the variable costs per unit did not change, but the break-even point increased to $429,000 Your answer is correct. Compute the variable costs per unit and the contribution margin ratio for 2019. (Round Variable cost per unit to 2 decimal places, e.g. 2.25 and Contribution margin ratio to...
Exercise 1. Fantasy Corporation manufactures a single product. The selling price is $125 per unit, and variable costs amount to $81 per unit. The fixed costs are $28,500 per month. (a) What is the contribution margin per unit $_ per unit (b) What is the contribution margin ratio? _% (Rounded to 1 decimal place) (c) What is the monthly sales volume (in dollars) at the break-even point? $_ (d) How many units must be sold each month to earn a...