Ques 1 | |||
i. | Selling price | $ 25.00 | 100.00% |
Variable expenses | $ 15.00 | 60.00% | |
Contribution margin | $ 10.00 | 40.00% | |
II. | |||
Breakeven in units = Fixed costs / contribution per unit | |||
breakeven=321000/10= | 32,100 | units | |
iii | |||
degree of operating levarage = contriution margin /net operating income | |||
DOL=520000/199000= | 2.61 | ||
b. | |||
i. | Selling price | $ 25.00 | 100.00% |
Variable expenses | $ 18.00 | 72.00% | |
Contribution margin | $ 7.00 | 28.00% | |
Ques 2 | |||
Breakeven in units = Fixed costs / contribution per unit | |||
breakeven=321000/7= | 45,857 | units | |
Ques 3 | |||
Target sales = target profit + fixed expenses / contribution margin p.u | |||
target sales(units)=(212000+199000)/7 | |||
target sales= | 74,286 | balls | |
ques 4 | |||
The contribution margin ratio last year was 40%. If we let P equal the new selling price, then | |||
P = $18 + 0.40 P | |||
0.60 P = $18 | |||
P=$18/0.60 | |||
P=$30 | |||
ques 5 | |||
Selling price | $ 25.00 | 100% | |
Variable expenses | $ 9.00 | 36% | |
Contribution margin | $ 16.00 | 64% | |
*$15 – ($15 × 40%) = $9 | |||
double fixed expenses = 2 * 321000= | 642000 | ||
Breakeven in units = Fixed costs / contribution per unit | |||
breakeven=642000/16= | 40,125 | units | |
ques 6 | |||
Target sales = target profit + fixed expenses / contribution margin p.u | |||
target sales(units)=(199000+642000)/16 | |||
target sales= | 52,563 | balls | |
part b | |||
Selling price | $ 1,300,000.00 | ||
Variable expenses | $ 468,000.00 | ||
Contribution margin | $ 832,000.00 | ||
fixed expenses | $ 642,000.00 | ||
net operating income | $ 190,000.00 | ||
degree of operating levarage = contribution margin /net operating income | |||
DOL=832000/190000= | 4.38 |
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 52,000 of these balls, with the following results: Sales (52,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,300,000 780,000 520,000 321,000 $ 199,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is dir labor cost Last year, the company sold 46,000 of these balls, with the following results: Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,150,000 690,000 460,000 318,000 $ 142,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labor cost Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
16 Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. olnts Last year, the company sold 46,000 of these balls, with the following results: eBook Print Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,150,000 690,000 460,000 318,000...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 36,000 of these balls, with the following results: $ Sales (36,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income 900,000 540,000 360,000 263,000 97,000 Required: 1. Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 40,000 of these balls, with the following results: Sales (40,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $1,000,000 600,000 400.000 265,000 $ 135,000 Required: 1. Compute...
Northwood Company manufactures basketballs. The company has a ball that sells for $25 At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball of which 60% is direct labor cost. Last year, the company sold 42,000 of these balls, with the following results 11 Sales (42,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,050,000 630,000 420,000 266,800 $ 154,000 at...