Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost...

Question

Question

Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost...

Selling Price Per Unit 17
Revelant Range 65,000 -120,000 units

Cost of Manufacturing

Variable Cost 9.00
Fixed Cost 450,000

Selling and Admin

Variable Cost Per Unit 1.25
Fixed 50,000

Explain the relevant range referred to above, show the variable cost and the fixed cost per unit at 115,000 units. Why would you not use the above information to determine the cost at 125,00 units.

Part 2

The company produced 100,000 units based upon the above info, and sold 80,000 units

Determine the Operating Income using variable costing?

Determine the margin of safety and degree of operating leverage?

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Total variable cost per unit = $9 + $1.25 = $10.25

Fixed cost = $450,000 + $50,000 = $500,000

Variable cost per unit does not change with change in number of units produced.

Variable cost per unit = $10.25

Fixed cost per unit = $500,000 / 115,000 = $4.35

The fixed cost per unit changes with change in the number if units produced. Hence per unit costs calculated for 115,000 units cannot be used for calculating 125,000 units.

Part 2

Sales	$1,360,000
Variable cost	$820,000
Contribution margin	$540,000
Fixed cost	$500,000
Operating income	$40,000

Breakeven sales = [$500,000 / ($17 - $10.25)] X $17 = $1,259,258

Margin of safety = $1,360,000 - $1,259,258 = $100,742 (or) $100,741

Degree of operating leverage = $540,000 / $40,000 = 13.50

Note: The margin of safety in dollars is calculated and the answer might differ because of decimal places to be used. There are no instructions regarding number of decimal places to be used in the question.

Add a comment

Answer 2

Similar Homework Help Questions

Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost...

Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost 9.00 Fixed Cost 450,000 Selling and Admin Variable Cost Per Unit 1.25 Fixed 50,000 What is the break even in sales dollars. What is the level of sales necessary to generate a profit of 54,000.
Chapter 5: Applying Excel Data Unit sales 20,000 units $60 Selling price per unit Variable expenses...

Chapter 5: Applying Excel Data Unit sales 20,000 units $60 Selling price per unit Variable expenses per unit Fixed expenses per unit $45 per unit $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relations hips Compute the CM ratio and variable expense ratio Selling price per unit Variable expenses per unit Contribution margin per unit ? per unit ? per unit ? per unit CM ratio Variable expense ratio ? Compute...
Problem 11-4 NYM Manufacturing Company makes a product. Selling Price per unit Variable manufacturing cost per unit Variable selling expense per unit (sales commissions) Annual Fixed Manufacturing Co...

Problem 11-4 NYM Manufacturing Company makes a product. Selling Price per unit Variable manufacturing cost per unit Variable selling expense per unit (sales commissions) Annual Fixed Manufacturing Costs Annual Fixed Selling and Admin Costs 150 80 25 40,000 s 60,000 REQUIRED Determine the break-even point in units and dollars using the following approaches. 1 Equation method 2 Contribution margin per unit. 3 Contribution margin ratio. 4 Confirm your results by preparing a contribution margin income statement for the breakeven sales...

Question Completion Status: QUESTION 10 If selling price per unit remains the same, unit variable cost...

Question Completion Status: QUESTION 10 If selling price per unit remains the same, unit variable cost remains the same, sales volume in units remains the same, and total fixed costs increase by $10,000, which of the following predictions is correct? Unit Contribution Margin Break-Even Volume Total Profit ОА Same Increase Decrease Same Decrease Decrease Increase Increase Decrease Decrease Decrease Increase Decrease Increase Decrease QUESTION 11 At sales volume of 600 units, variable costs are 58 per unit, and fixed costs...
A company manufactures cell phone cases. The selling price per case is $20 with a variable...

A company manufactures cell phone cases. The selling price per case is $20 with a variable cost per unit of $10. The forecasted sales for the year are $400,000. Related costs are shown below. Depreciation $35,000 Fixed Overhead 40,000 Fixed Admin 65,000 Fixed Selling 20,000 What is the margin of safety? a) 7,500 units b) 26,000 units c) 6,000 units d) 4,000 units
Equality Unlimited sold 15,000 units at $10 each. Per unit cost are: $1.50 variable selling expenses;...

Equality Unlimited sold 15,000 units at $10 each. Per unit cost are: $1.50 variable selling expenses; $0.75 direct material; $1.25 direct labor; $2 overhead. Fixed selling costs are $25,000 per year. Net income is: A) $65,000 B) $42,500 C) $150,000 D) $90,000

Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense...

Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 11,000 17 1 3 $ 21,000 $ 15,000 $ 8,000 $ 25,000 $ 86,000 points Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1...
Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense...

Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases 20,000 $30 $4 $2 $40,000 $30,000 $24,000 $44,000 $180,000 2. Prepare a contribution format income statement Cherokee, Inc. Contribution Format Income Statement Sales. Variable expenses: Cost of goods sold. Selling expense Administrative expenses Fixed expenses: Selling expenses Administrative expenses... Net operating income ....
Assume a selling price of $20 per unit, variable cost per unit of $12, and total...

Assume a selling price of $20 per unit, variable cost per unit of $12, and total fixed cost of $500. If 200 units are sold, calculate the contribution margin and the operating income.

Cost A Cost B Cost C Total Costs 60,000 units $75,000 $120,000 $65,000 $260,000 90,000 units...

Cost A Cost B Cost C Total Costs 60,000 units $75,000 $120,000 $65,000 $260,000 90,000 units $75,000 $180,000 $80,000 $335,000 Cost B is a cost. O A. sunk O B. fixed O c. mixed OD. variable Total fixed costs for Taylor Incorporated are $270,000. Total costs, including both fixed and variable, are $400,000 if 151,000 units are produced. The variable cost per unit is O A. $4.44/unit. O B. $1.79/unit O c. $2.65/unit. OD. $0.86/unit Which of the following would...

Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost...

Homework Answers

Add Answer to:
Selling Price Per Unit 17 Revelant Range 65,000 -120,000 units Cost of Manufacturing Variable Cost...

Post as a guest

Earn Coins