Question

Required information Problem 3-23A Comprehensive CVP analysis LO 3-3, 3-4, 3-5 [The following information applies to the questions displayed below.] Benson Company makes and sells products with variable costs of $41 each. Benson incurs annual fixed costs of $27,300. The current sales price is $62. Problem 3-23A Part a Required The following requirements are interdependent. For example, the $6,300 desired profit introduced in Requirement calso applies to subsequent requirements. Likewise, the $53 sales price introduced in Requirement d applies to the subsequent requirements. a. Determine the contribution margin per unit. Contribution margin per s 21 unit

Answer 1

Required D1

Let the desired sales volume be x. The amount of profit desired is $6,300 with a per unit sale price of $53, variable cost of $41/unit and fixed costs of $27,300. The following equation can be solved for x

53x – 41x – 27,300	= 6,300
12x	= 33,600
x	= 2,800

Therefore the desired sales volume in units is 2,800

Required D2

Benson Company
Income Statement
Sales (2,800 units * $53/unit)	$        148,400
Variable Cost (2,800 units * $41/unit)	$        114,800
Contribution margin	$          33,600
Fixed Cost	$          27,300
Net income	$            6,300

Required E1

Let the desired sales volume be x. The amount of profit desired is $6,300 with a per unit sale price of $53, variable cost of $41/unit and fixed costs of $20,100. The following equation can be solved for x

53x – 41x – 20,100	= 6,300
12x	= 26,400
x	= 2,200

Required E2

Benson Company
Income Statement
Sales (2,200 units * $53/unit)	$        116,600
Variable Cost (2,200 units * $41/unit)	$          90,200
Contribution margin	$          26,400
Fixed Cost	$          20,100
Net income	$            6,300

Note: Answered first 4 sub-parts of the question as HOMEWORKLIB guidelines.