contribution margin per unit= | 201000/13400 | |||||||
15 | ||||||||
1) | CM ratio = contribution/sales | |||||||
201000/15 | ||||||||
50.00% | ||||||||
BEP(units) = total fixed cost/contribution margin per unit | ||||||||
223500/15 | ||||||||
14900 | ||||||||
BEP(dollars) = 14900*30 | ||||||||
447000 | ||||||||
CM ratio | 50% | |||||||
Break even point in units | 14900 | |||||||
Break even point in dollars | 447000 | |||||||
2) | increase in contribution | (90000*50%) | 45000 | |||||
less : increase in advertising budget | 7,000 | |||||||
increase in net income | 38,000 | |||||||
increases by | 38,000 | |||||||
3) | units = 13400*2 = | 26800 units ; selling price = 30*90%=$27 | ||||||
Contribution Income statement | ||||||||
Sales | (26800*27) | 723600 | ||||||
Variable expense | (26800*15) | 402000 | ||||||
Contribution margin | 321600 | |||||||
Fixed expenses | (223500+37000) | 260,500 | ||||||
Net income | 61,100 | |||||||
4) | New contribution margin = 15-.80 | |||||||
14.2 | ||||||||
BEP(units) = (total fixed cost+target profit)/contribution per unit | ||||||||
(223500+4600)/14.2 | ||||||||
16063.38028 | ||||||||
Sales units | 16,063 | |||||||
5) | ||||||||
CM ratio = contribution/sales | ||||||||
18/30 | ||||||||
60.00% | ||||||||
BEP(units) = total fixed cost/contribution margin per unit | ||||||||
(223500+51000)/18 | ||||||||
15250 | ||||||||
BEP(dollars) = | 274500/60% | |||||||
457500 | ||||||||
CM ratio | 60% | |||||||
Break even point in units | 15250 | |||||||
Break even point in dollars | 457500 | |||||||
20800 | ||||||||
b) | Not Automated | Automated | ||||||
total | per unit | % | total | per unit | % | |||
Sales | 624000 | 30 | 100% | 624000 | 30 | 100% | ||
Variable expenses | 312000 | 15 | 50% | 249600 | 12 | 40% | ||
Contribution margin | 312000 | 15 | 50% | 374400 | 18 | 60% | ||
Fixed expenses | 223,500 | 274,500 | ||||||
Net operating income | 88,500 | 99,900 | ||||||
c) | yes |
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5- 1, LO5-3, LO5-4, LO5-5,...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below. Sales (12,800 units * $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 256,000 128.000 128,000 143, eee $ (15,000) Required: 1. Compute the...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,400 units X $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $402,000 241,200 160,800 178,800 $(18,000) Required: 1. Compute the company's CM ratio...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: $ Sales (12, 900 units X $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss 258, 000 154, 800 103, 200 115, 200 (12, 000)...
Problem 5-22 CVP Applications; C。ntribution Margin Ratio; Break-Even Analysis; Cost Structure L05-1, し05.3, LO5-4, LO5-5, LOS-6] Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,500 units x $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 270,000 135,000 135,000 150,000 $ (15,000) Required: 1. Compute the company's...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing fin difficulty for some time. The company's contribution format income statement for the most recent month is given below: S 585,000 409,500 175,500 180,000 Sales (19,500 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ (4,500) Required 1. Compute the company's...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing fin difficulty for some time. The company's contribution format income statement for the most recent month is given below: S 585,000 409,500 175,500 180,000 Sales (19,500 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ (4,500) Required 1. Compute the company's...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing fin difficulty for some time. The company's contribution format income statement for the most recent month is given below: S 585,000 409,500 175,500 180,000 Sales (19,500 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ (4,500) Required 1. Compute the company's...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6] Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,200 units * $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $264,000 132,000 132,000 147,000 $(15,000) Required: 1. Compute the company's CM ratio...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6] Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (13,000 units × $30 per unit) $ 390,000 Variable expenses 195,000 Contribution margin 195,000 Fixed expenses 217,500 Net operating loss $ (22,500 ) Required: 1. Compute the...
Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6] Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (13,300 units × $20 per unit) $ 266,000 Variable expenses 159,600 Contribution margin 106,400 Fixed expenses 118,400 Net operating loss $ (12,000 ) Required: 1. Compute...