Question

Chapter 5 - Assignment Exercise Assignment Exercise 5-8 (with fixed costs added) Template Contribution Margin ans maker is designing a new line of leans called Slims. The following information describes a product expected to be produced and sold by the company Selling price Variable costs Total fixed costs $205 per unit $164 per unit $246,000 per year Required: a. Calculate the contribution margin per unit. b. Calculate the contribution margin ratio. c. Calculate the break-even point in units. d. Breakeven point in dollar sales. Worksheet: | a. Selling Price per Phir variable costs per pair205-164 = 41 units 1 D. Contribution Marsin selling price per Phir 41 /205: 207 * c. Original fixed cost / contribution Alerinwit 216,000 /41 : 6.000 * d. Te Cost / Contrino in ske. 26.900 720% B 0 00 e. What does the contribution margin ratio reveal? The Company has a 20% of each scules doller to cover the (company's fired exrense and profit. f. Based on the above, what dollar amount of sales would be necessary to achieve a pretax income of $50,000? Worksheet: If the company achieves its target pretax income of $50,000, what is its margin ofenfor percent, round to one decimal)? Worksheet:

I need help with ( F, G, and H please)

Answer 1

f.Sales required to earn desired income = (Desired pre tax income + Fixed costs)/Contribution Margin Ratio

= (50,000+246000)/20%

= $1,480,000

g.Margin of Safety % = (Sales -Break even sales)/Sales

= (1,480,000-1,230,000)/1,480,000

= 16.9%

H.

Contribution Margin Income Statement
Sales Revenue	1,480,000
Less: Variable costs	1,184,000
Contribution Margin	296,000
Less: Fixed costs	246,000
Net Operating Income	50,000