a. | Break-even point in dollar sales | 14,555,000 | |||||
BEP(dollar sales) = | fixed expense/contribution margin ratio | ||||||
Fixed cost | 5,822,000 | ||||||
Contribution margin | 40.0% | ||||||
b) | Break even point in dollar sales | 16,634,286 | |||||
c) | Break even point in dollar sales | 18,685,053 | |||||
2) | Voulme of sales (in dollars) | 24,000,000 | |||||
(Target income before taxes +fixed expense)/contribution margin | |||||||
3) | Voulme of Sales (in dollars) | 24,427,200 | |||||
X = | total evenue | ||||||
.65 X + 5,822,000= | .525x +8,875,400 | ||||||
0.125 | x | = | 3,053,400 | ||||
x = | 24427200 | ||||||
4) | |||||||
a) | Degree of operating leverage | 3.26 | |||||
b) | Degree of operating leverage | 4.81 | |||||
c) | Degree of operating leverage | 9.07 | |||||
degree of operating leverage = contribution marging/income before taxes |
Working
15% comm | 20% comm | 7.5% comm | ||||||
Sales | 21,000,000 | 100% | 21,000,000 | 100% | 21,000,000 | 100% | ||
Variable expenses: | ||||||||
manufacturing | 9,450,000 | 9,450,000 | 9,450,000 | |||||
comissions (15%;20%,7.5%) | 3,150,000 | 4200000 | 1575000 | |||||
total variable expense | 12,600,000 | 60.0% | 13,650,000 | 65.0% | 11,025,000 | 52.5% | ||
contribution margin | 8,400,000 | 40.0% | 7,350,000 | 35.0% | 9,975,000 | 47.5% | ||
fixed expenses | ||||||||
manufacturing overhead | 2,940,000 | 2,940,000 | 2,940,000 | |||||
marketing | 147,000 | 147,000 | 3,297,000 | |||||
administrative | 2,000,000 | 2,000,000 | 1,903,400 | |||||
interest | 735,000 | 735,000 | 735,000 | |||||
total fixed expense | 5,822,000 | 5,822,000 | 8,875,400 | |||||
income before income taxes | 2,578,000 | 1,528,000 | 1,099,600 | |||||
income taxes (30%) | 773400 | 458400 | 329880 | |||||
net income | 1,804,600 | 1,069,600 | 769,720 | |||||
increase in fixed expense-marketing | 3,150,000 | |||||||
saving in administrative expense | -96600 |
4, LO5-5, LO5-6] Pittman Company is a small but growing manufacturer of telecommunications equipment. The company...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $ 21,000,000 12,390,000 8,610,000 Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses:...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales $ 21,000,000 Manufacturing expenses: Variable $...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $21,000,000 12,390,000 8,610,000 Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses: Variable...
Check Case 5-33 Cost Structure; Break-Even and Target Profit Analysis (LO5-4, LO5-5, LO5-6] Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $21,000,000 12,390,000 8,610,000 Pittman Company...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $22,500,000 pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses Variable $10,125,000 Fixed...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $ 23,500,000 13,865,000 9,635,000 Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses:...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $ 23,500,000 13,865,000 9,635,000 Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses...
help?! CASE LO6-4, LO6-5, LO6-6 Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: Pittman Company Budgeted Income Statement For the Year Ended December 31 $16,000,000 $7,200,000...
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $ 26,000,000 15,340,000 10,660,000 Pittman Company Budgeted Income Statement For the Year Ended December 31 Sales Manufacturing expenses:...
Check my work Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own rather, it relles completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold. Barbara Cheney, Pittman's controller, has just prepared the company's budgeted income statement for next year as follows: $ 26,000,000 15, 340,000 10,660,000 Pittman Company Budgeted Income Statement For the Year Ended December...