Delta Corporation’s production and sales data provided below:
Per Unit Percentage
Selling price $9.00 100%
Variable cost $6.00 66.67%
Contribution margin $3.00 33.33%
Total fixed costs $30,000
Compute a break-even point in units and dollars if the following changes occurred:
Selling price decreased by one-tenth.
Variable costs decreased by one-third.
Fixed costs increased by one-third.
2. Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $59. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 25 units and may help her offset the increase in fixed...
Knowledge Check 01 Shorebridge Repair's current sales revenue is $150,000 and its break-even sales point is $120,000. It incurs fixed costs of $100,000. What is its margin of safety? $150,000 $50,000 $120,000 $30,000 Knowledge Check 02 Shorebridge Repair's current sales revenue is $150,000 and its break-even sales point is $120,000. It incurs fixed costs of $100,000. What is its margin of safety as a percentage of sales? 20% 80% 66.67% O 33.33%
APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Lennon Products Further analysis of Lennon Products’s fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $4.00 per unit; direct labor costs, $5.00 per unit; and variable overhead costs, $1.00 per unit. At this time, the selling price of $20 will not change. Complete the following formulas...
APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Epstein Hardware Further analysis of Epstein Hardware’s fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $4.00 per unit; direct labor costs, $5.00 per unit; and variable overhead costs, $1.00 per unit. At this time, the selling price of $20 will not change. Complete the following formulas...
Iris Manufacturing Inc. has provided you with the following CVP income statement: Sales (5,500 units) $1,100,000 $200 per unit Variable costs 693,000 126 per unit Contribution margin 407,000 $74 per unit Fixed costs 339,660 Operating income $67,340 Management is considering the following course of action to increase operating income: reduce the selling price by 10%, with no changes to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%. Calculate the break-even point...
Knowledge Check 01 Shorebridge Repair's current sales revenue is $150,000 and its break-even sales point is $120,000. It incurs fixed costs of $100,000 What is its margin of safety? $150,000 $50,000 $120,000 • $30,000 Knowledge Check 02 Shorebridge Repair's current sales revenue is $150,000 and its What is its margin of safety as a percentage of sales? is $120.000. It incurs fixed costs of $100,000 • 20% 800 66.67% 33.33%
Solomon Company reported the following data regarding the product it sells: Sales price Contribution margin ratio Fixed costs s 60 259 $360,000 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 $30,000, what must the sales be in dollars? In units? c. If the sales price increases to $75 and variable costs do not change, what is the new break-even point...
The section of Waterways that produces controllers for the company provided the following information. Sales in units for month of February 4,100 Variable manufacturing cost per unit $9.00 Sales price per unit $42.00 Fixed manufacturing overhead cost (per month for controllers) $80,000 Variable selling and administrative expenses per unit $3.60 Fixed selling and administrative expenses (per month for controllers) $12,400 Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in...
Question 4 Iris Manufacturing Inc. has provided you with the following CVP income statement Sales (5,300 units) $1,060,000 $200 per unit Variable costs Contribution margin 371,000 $70 per unit Fixed costs Operating income 689,000 130 per unit 310,800 60,200 Management is considering the following course of action to increase operating income: reduce the selling price by 20%, with no changes to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%. Calculate the...
Cullumber Bucket Co., a manufacturer of rain barrels, had the following data for 2019. Sales 2,260 units Sales price $50 per unit Variable costs $30 per unit Fixed costs $20,340 What is the contribution margin ratio? Contribution margin ratio enter the Contribution margin ratio in percentages % What is the break-even point in dollars? Break-even point $enter the break-even point in dollars What is the margin of safety in dollars and as a ratio? Margin of...