Solution 1: | ||||
Sales Price | 120 | |||
Less: Variable cost per unit | 60 | |||
Contribution Margin per unit | 60 | |||
Contribution Margin ratio | 50.00% | |||
Solution 2: | ||||
Fixed costs | 180000 | |||
/Contribution Margin ratio | 50% | |||
Break-even point in sales dollars | 360000 | |||
Solution 3: | ||||
Increase in sales | 6600000 | |||
*Contribution Margin ratio | 50% | |||
Net operating income Increase by | 3300000 | |||
Solution 4-a: | ||||
Total Contribution margin | 1620000 | |||
/ Net operating income | 1440000 | |||
Degree of operating leverage | 1.13 | |||
Solution 4-b: | ||||
% Increase in sales | 11% | |||
*Degree of operating leverage | 1.13 | |||
Net operating income Increase by | 12.43% | |||
Solution 5-a: | ||||
Feather friend Inc. | ||||
Contribution Income statement | ||||
Last Year | Proposed | |||
27000 | units | 33750 | units | |
Particulars | Total | Per unit | Total | Per unit |
Sales | 3240000 | 120 | 3523500 | 104.40 |
Variable expenses | 1620000 | 60 | 2025000 | 60 |
Contribution margin | 1620000 | 60 | 1498500 | 44.4 |
Fixed expenses | 180000 | 242000 | ||
Net operating income | 1440000 | 1256500 | ||
Solution 5-b: | ||||
Decrease in net operating income | $183,500 | |||
Solution 6: | ||||
Existing contribution margin per unit | 60 | |||
Less: Increase in sales commission | 1.90 | |||
New contribution margin per unit | 58.10 | |||
New sales units | 33750 | |||
*New contribution margin per unit | 58.10 | |||
Total Contribution margin | 1960875 | |||
Less: Target operating income | 1440000 | |||
Minimum Fixed cost | 520875 | |||
Less: existing fixed cost | 180000 | |||
Amount by which advertising can be increased = | 340875 |
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3, 240,000 1,620,000 1,620,000 180,000 $ 1,440,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even...
Feather Friends, Inc, distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Rectangular Snip Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,880,000 1,440,000 1,440,000 180,000 $ 1,260,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $3,240,000 1,620,000 1, 620,000 180,000 $1,440,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Variable expenses Contribution margin Fixed expenses Net operating income $ 3, 120, eee 1, 55e, Bee 1,550,000 10,eee $ 1,398,eee Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales $ 3,240,000 Variable expenses 1,620,000 Contribution margin 1,620,000 Fixed expenses 200,000 Net operating income $ 1,420,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: points (8 03:38:50 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,160,000 1,080,000 1,080,000 180,000 $ 900,000 eBook Required: Answer each question independently based on the original data: Print 1. What is the product's CM ratio? 2. Use the CM ratio...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,000,000 500,000 500,000 160,000 $ 340,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...