Question

1. Criollo Auto Sales is a luxury car sales company. Present the following information about your business and request management advice to meet your business objectives. Average sale price of their vehicles for sale $ 32,500 Costs incurred for the purchase of the cars from the manufacturer on average $ 23,025 Commission for sellers per car - 3% of the sales price Advertising cost (cars sold or not) $ 7,000 Monthly rental of physical facilities $ 16,000 Monthly salaries of managers, owners and employees $ 125,000 Other fixed monthly costs $ 12,000 REQUIRED. SHOW CLEARLY THE CALCULATIONS MADE 1. Determine the Variable Cost per unit. 2. Determine the Fixed Cost by total. 3. Build a Contribution Margin Approach table for each of the following situations: to. Tie point in units (use 4 decimal places) and in dollars. b. If the owner wants an operating income (Operating Income) of $ 50,000 per month, how many cars must be sold in excess at the point of tie, to achieve the owner's desire? c. If the owner aspires to a Net Income of $ 150,000 per month, how many sales on the point of tie has to materialize? Tax 30%

Answer 1

Answer with working is given below

please note units are kept upto 4 decimals for Q.No. 3

1 $23,025 Variable cost per unit Cost for purchase Commission Total variable cost per unit $975 ($32,500*3%) $24,000 2 Fixed cost Advertising cost Rental cost Salaries Other Fixed cost Total Fixed cost $7,000 $16,000 $125,000 $12,000 $160,000 Units 3 Break even point in Sales Units Fixed Cost Contribution per unit $160,000 $8,500 18.8235 4500*100 = 450,000 yards $ Sales Break even point Sales dollars Fixed Cost Contribution margin % 1 $160,000 26.15% $611,765 Selling price Variable cost Contribution per unit Contribution margin % (Contribution/Sales)*100 $32,500.00 $24,000.00 $8,500.00 26.15% Contribution Margin Income Statement Total Sales $611,764 cost for purchase $433,411 Commission - 3% of Sales $18,353 $451,764 Contribution $160,000 Fixed Cost $160,000 Net profit Fixed cost Net operating income Total Target $160,000 $50,000 $210,000 Units $210.000 Total Target Contribution per unit $8,500 24.7059 6 units in excess of break even point must be sold to get operating income of $50,000 per month Contribution Margin Income Statement Total Sales $802,942 cost for purchase $568,853 Commission - 3% of Sales $24,088 $592,942 Contribution $210,000 Fixed Cost $160,000 Net profit $50,000 Fixed cost Net operating income Total Target $160,000 $214,286 ($150,000/(1-0.30) $374,286 Units $374,286 Total Target Contribution per unit 44.0336 $8,500 Sales must be 26 units in excess of Break even point to achieve net income of $150,000 per month Contribution Margin Income Statement Total Sales $1,431,092 cost for purchase $1,013,874 Commission - 3% of Sales $42,933 $1,056,806 Contribution $374,286 Fixed Cost $160,000 Net profit $214,286 Tax at 30% $64,286 Net Income $150,000