Question

Need help answering the problems with no numbers in them. The ones with the numbers are correct.

Jordan Company reported the following data regarding the product it sells: Sales price Contribution margin ratic Fixed costs 50 10% $150,000 Required Use the contribution margin ratio approach and consider each requirement separately a. What is the break-even point in dollars? In units? b. To obtain a profit of $50,000, what must the sales be in dollars? In units? c. If the sales price increases to $60 and variable costs do not change, what is the new break-even point in dollars? In units? S 1,500,000 a. Break-even point in dollars Break-even point in units 30,000 b. Sales in dollars Sales in units 40,000 C. I Break-even point in dollars Break-even point in units

Answer 1

	Contribution Margin per unit = Sales Price X 10% = $ 50 X 10% = $ 5.00
	Contribution Margin in % = 10%
	Answer =A)
	CALCULATION OF THE BREAK EVEN POINT IN DOLLARS
	Break Even point =      Fixed Cost / Contribution Margin Ratio
	Break Even point =
	Fixed Cost =	$               1,50,000
	Divide By	"/" By
	Contribution Margin Ratio =	10%
	Break Even point =	$             15,00,000
	CALCULATION OF THE BREAK EVEN POINT IN UNITS
	Break Even point =      Fixed Cost / Contribution Margin Per Unit
	Break Even point =
	Fixed Cost =	$               1,50,000
	Divide By	"/" By
	Contribution Margin Per Unit =	$                             5
	Break Even point =	30,000	Units
	Answer Break even point in units = 30,000 Units
	Answer =B)
	Target Profit = ( Fixed Cost + target Income ) / Contribution Margin Ratio
	Target Profit =
	Fixed Cost =	$               1,50,000
	Add:	"+ "
	Target Income =	$                   50,000
	Equal to =	$               2,00,000
	Divide By	"/"By
	Contribution marrgin Ratio	10%
	Equal to =Sales in Dollar	$             20,00,000
	Target Profit = ( Fixed Cost + target Income ) / Contribution Margin per unit
	Target Profit =
	Fixed Cost =	$               1,50,000
	Add:	"+ "
	Target Income =	$                   50,000
	Equal to =	$               2,00,000
	Divide By	"/"By
	Contribution marrgin Per unit	$                             5
	Equal to =Total Units	40,000	Units
	Answer =C)
	Contribution Margin per unit
	Sales Price =	$                           60
	Less: Variable Cost ( $ 50 X 90% )	$                           45
	Contribution Margin per unit	$                           15
	Contribution Margin in % = $ 15 / $ 60 = 0.25 or	25%
	CALCULATION OF THE BREAK EVEN POINT IN DOLLARS
	Break Even point =      Fixed Cost / Contribution Margin Ratio
	Break Even point =
	Fixed Cost =	$               1,50,000
	Divide By	"/" By
	Contribution Margin Ratio =	25%
	Break Even point =	$               6,00,000
	CALCULATION OF THE BREAK EVEN POINT IN UNITS
	Break Even point =      Fixed Cost / Contribution Margin Per Unit
	Break Even point =
	Fixed Cost =	$               1,50,000
	Divide By	"/" By
	Contribution Margin Per Unit =	$                           15
	Break Even point =	10,000	Units
	Answer Break even point in units = 10,000 Units