Question

x + - x WlesPLUS → C x C Celle Hely Will Chey duger.wileyplus.ccrry'edugarului/main.uni ice Assignment Gradebook ORION nent PRINTER VERSION BACK NE Waterways Continuing Problem-6 (Part 1) The vice-president of sales and marketing, Madison Tremblay, is tying to plan for the coming year in terms of production needs to meet the forecasted sales. The board of directors is very supportive of any initiatives that will lead to increased profits for the company in the upcoming year. Waterways markets a simple water controller and timer that it mass produces. During 2016, the company sold 180,000 units at an average selling price of $ per unit. The variable expenses were $1,740,000, and the fixed expenses were 5355,000. What is the product's contribution margin ralid? (Round answer to 2 decimal places, e.g. 25.15%) Contribut on margin ratio +2.50% LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT What is the company's hraak-even point in units and in dollars for this product? (Round answers to O decimal places, e.g. 5,275.) Break-even point in units 113235 units Break-even point in dollars 905882 LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TENT LINK TO TEXT What is the margin of safety, both in dollars and as a ratio? (Round ratio to 2 decimal places, e.g. 25.25%.) Margin of safety in collass 2134113 ali 2000-2020 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc. Version 4.2 Type here to search (x ) ENG R:46 PM 29-11-27

Hi, please go over answers that are filled in and please answer blank questions. Thanks.

Answer 1

Most of the answers are correct except one, which is Increase income by 10% and additional units to achieve this profit.

Please go through the following attachment for the workings

The additional units calculation is presented in formula method and statement method.

1. Contribution Margin Ratio Contribution 380000*8-1748000 1292000 Formula 42.5 Sales 380000*8 3040000 2. Break Even point Fixed Cost 385000 Units In Units 113235 1292000/380000 Contribution Per unit Fixed Cost 385000 In dollars 905882 Contribution Margin 42.50% 3. Margin of Safety In dollars Total Sales-Break even sales 3040000-905882 2134118 Margin of Safety/Total Sales 2134118/304000 In % 70.20% 4. Number of units for desired Income Addition New Current Sales 3040000 3253412 Less: Variable Cost 1870712 1748000 Contribution 1292000 1382700 Less: Fixed Cost 385000 385000 Operating Income 997700 907000 10% Existing New New Units = 3253412/8 406676.5 380000 26676.5 Or Fixed Cost + Desired Profit Contribution Margin Ratio Formula for new 385000+907000+90700 3253412 sales 42.50% 3253412 New Units 406676 Less: Existing 380000 Additional Units 26676 5. Calculation of new income Addition New Current Increase Sales 3040000 78000*8 3664000 Less: Variable Cost 1748000 2106800 1557200 1292000 Contribution Less: Fixed Cost 385000 385000 907000 Operating Income 1172200 265200 A-B

6. Effect on Contribution Margin and Operating Income. Effect Current New by by 4.33 % Contribution Margin Ratio 28.26 % 32.59 % Increase Operating Income 997620 2160577 Increase 1162957 Particulars Addition Current New 540910*110%*27.28 Sales 14604570 16231627 Less: Variable Cost Manufacturing Cost 7549863 7549863 Selling and Admin Cost 2927487 2927487 540910*110%*0.78 464101 Increase Contribution 4127220 5290177 Less: Fixed Cost Manufacturing Cost 2255150 2255150 Selling and Admin Cost 874450 874450 997620 Operating Income 2160577 7. Effect on Contribution Margin and Operating Income. Contribution Margin Ratio Increase By 3.63% 996356 Profit By Increase Particulars Addition New Current Sales 540910*110%*27 14604570 16065027 Less: Variable Cost Manufacturing Cost 7549863 7549863 Selling and Admin Cost 2927487 2927487 540910*110%*0.78 464101 Increase Contribution 4127220 5123576 Less: Fixed Cost Manufacturing Cost 2255150 2255150 Selling and Admin Cost 874450 874450 Operating Income 1993976 997620 Contribution Margin Ratio 28.26% 31.89%