Req 1 | |||||||
CM Ratio | 40.00% | ||||||
Unit Sales to break even | 21200 | ||||||
Degree of operating leverate | 1.60 | ||||||
CM ratio = contribution /sales | |||||||
340,000/850,000 | |||||||
40.00% | |||||||
BEP(units) = fixed cost/contribution margin per unit | |||||||
212000/10 | |||||||
21200 | |||||||
Degree of operating leverage = contribution/net income | |||||||
340000/212000 | |||||||
1.60 | |||||||
Req 2 | CM Ratio | 28.00% | |||||
Unit Sales to break even | 30286 | ||||||
CM ratio = contribution /sales | |||||||
7./25 | |||||||
28.00% | |||||||
BEP(units) = fixed cost/contribution margin per unit | |||||||
212000/7 | |||||||
30286 | |||||||
Req 3 | |||||||
Number of balls | 48571 | ||||||
BEP(units) =( fixed cost+ target income)/contribution margin per unit | |||||||
(212000+128000)/7 | |||||||
48571 | |||||||
Req 4 | selling price | 30.00 | |||||
CM ratio = 40% | |||||||
selling price per unit be x | |||||||
variable cost per unit is 18 | |||||||
so selling price should be = | |||||||
40% = (x-18)/x | |||||||
.40x = (x -18) | |||||||
x =18/.6 | |||||||
x = | 30.00 | ||||||
Req 5 | Selling price per unit | 25 | |||||
New variable cost | (15*60%) | 9 | |||||
Contribution per unit | 16 | ||||||
fixed expense = 212000*200%= | 424000 | ||||||
contribution margin ratio | 64.00% | ||||||
unit sales to break-even | 26500 | balls | |||||
Req 6A | number of balls | 34500 | balls | ||||
(424000+128000)/16 | |||||||
Req6B | Contribution income statement | ||||||
Sales | (34000*25) | 850000 | |||||
Variable expenses (34000*9) | 306000 | ||||||
Contribution margin | 544000 | ||||||
Fixed expenses | 424,000 | ||||||
Net operating income | 120,000 | ||||||
Degree of operating leverage | 4.53 | ||||||
(contribution margin/net income) |
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 62,000 of these balls, with the following results: Sales (62,000 balls) $ 1,550,000 Variable expenses 930,000 Contribution margin 620,000 Fixed expenses 426,000 Net operating income $ 194,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) $ 1,100,000 Variable expenses 660,000 Contribution margin 440,000 Fixed expenses 317,000 Net operating income $ 123,000 Required: Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: $ Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income 750,000 450.000 300,000 210,000 90,000 Required: 1. Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 52,000 of these balls, with the following results: Sales (52,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,300,000 780,000 520,000 321,000 $ 199,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 42,000 of these balls, with the following results: Sales (42,000 balls) $ 1,050,000 Variable expenses 630,000 Contribution margin 420,000 Fixed expenses 266,000 Net operating income $ 154,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 balls) $ 750,000 Variable expenses 450,000 Contribution margin 300,000 Fixed expenses 210,000 Net operating income $ 90,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 40,000 of these balls, with the following results: Sales (40,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $1,000,000 600,000 400.000 265,000 $ 135,000 Required: 1. Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is dir labor cost Last year, the company sold 46,000 of these balls, with the following results: Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,150,000 690,000 460,000 318,000 $ 142,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....