Question

EI SILY UI DVD Sve Acct 211 Spring 2020 Chapter 5 Group Quiz ACN Corp, Inc. is a manufacturer of coffee makers. They have only one model currently for sale/in production. Selected financial information for the year ending 12/31/2019 is provided below. Answer the questions using this information. Assume that the number of units produced and sold are the same. Total Per Unit Sales (10,000 units) 500,000 ?? Variable expenses 300,000 ?? Contribution Margin 200,000 ?? Fixed expenses 78,000 Net operating income 122,000 1. Calculate the following: Sales price per unit: - 50 Variable expenses per unit: 10,000 x Contribution Margin per unit: Contribution Margin ratio: Breakeven point in units: Degree of operating leverage: 2. You are tasked with helping ACN make a production plan for next year. Fixed expenses are expected to increase to $100,000 due to rent increases, and sales are expected to increase by 5%. Complete chart below filling in any missing information. Assume that variable costs per unit and sales price per unit did not chang Total Per Unit Sales _units) Variable expenses Contribution Margin Fixed expenses Net operating income
question 1&2

Answer 1

$ Given information Sales (10,000 units) Variable expenses Contribution Margin Fixed expenses Net operating income $ 5,00,000 3,00,000 2,00,000 78,000 1,22,000 $ Requirement 1 Sales price per unit: $ 50 Total Sales Price Total units $ 5,00,000 10,000 50 Variable expenses per unit: $ 30 Total Variable Total units 3,00,000 10,000 30 Contributoin Margin per unit: $ 20 Total Contribution Margin Total units 2,00,000 10,000 = $ 20

Contribution Margin ratio: 0.40 Total Sales - Total Revenue Total Sales 500,000 - 300,000 5,00,000 2,00,000 5,00,000 0.40 Breakeven point in units: 3,900 Fixed costs (Sales per Unit - Variable expense per Unit) 78,000 ($50 - $30) 78,000 20 3,900 Degree of operating leverage: 1.64 Total sales - Variable expense Total sales - Variable expense - Fixed Expenses 500,000 - 300,000 500,000 - 300,000 - 78,000 2,00,000 122000 1.64

Requirement 2 $ Sales (10,500 units) (10,500 X $50) Variable expenses (10,500 X $30) Contribution Margin Fixed expenses Net operating income Total 5,25,000 3,15,000 2,10,000 1,00,000 1,10,000 Per unit $ 50 30 $ 20 $ $