Question

The budgets of four companies yield the following information: (Click the icon to view the budget information for the four companies.) Read the requirements. Requirement 1. Fill in the blanks for each missing value. (Round the contribution margin per unit to the nearest cent. Use a minus sign or parentheses to enter an operating loss.) Sunny Rainy Cloudy Windy Net Sales Revenue $ 1,596,000 385,000 Variable Costs 58,000 231,000 165,750 Fixed Costs 208,000 236,000 Operating Income (Loss) 354,500 97,700 Units Sold 190,000 8,000 Contribution Margin per Unit $ 4.20 $ 77.00 17.00 Contribution Margin Ratio % 80 % % 40 % Requirements 2. and 3. Which company has the lowest breakeven point in sales dollars? What causes the low breakeven point? Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars for each company. (Complete all answer boxes. Round the breakeven point—the required sales in dollars—up to the nearest whole dollar. For example, $10.25 would be rounded to $11. Abbreviation used: CM = contribution margin.) ( + )/ Required sales in dollars

Answer 1

	Sunny	Rainy	Cloudy	Windy
Net Sales Revenue	1596000	290000	385000	276250
Variable costs	798000	58000	231000	165750
Contribution Margin	798000	232000	154000	110500
Fixed costs	443500	208000	236000	12800
Operating Income	354500	24000	-82000	97700
Units sold	190000	8000	2000	6500
Contribution Margin per Unit	4.2	29	77	17
Contribution Margin Ratio	50%	80%	40%	40%
(Fixed costs + Desired Profit)/CM Ratio = Required Sales in Dollars
Sunny	887000
Rainy	260000
Cloudy	590000
Windy	32000
Windy has lowest break even point due to lowest fixed costs

A B Sunny 1596000 =B2-B4 1 2 Net Sales Revenue 3 Variable costs 4. Contribution Margin 5 Fixed costs 6 Operating Income 7 Units sold 8 Contribution Margin per Unit 9 Contribution Margin Ratio 10 11 (Fixed costs + Desired Profit)/CM Ratio = Required Sales in Dollars 12 Sunny 13 Rainy 14 Cloudy 15 Windy =B8*B7 =B4-B6 354500 190000 4.2 =B4/B2 D E Rainy Cloudy Windy =C3/20% 385000 =E3/60% 58000 231000 165750 =C2-C3 =D2-D3 =E2-E3 208000 236000 =E4-E6 =C4-C5 =D4-D5 97700 8000 =D4/D8=E4/E8 =C4/C7 77 17 0.8 =D4/D20.4 =(B5+0)/B9 1=(C5+0)/C9 =(D5+0)/D9 =(E5+0)/E9 16 17 Windy has lowest break even point due to lowest fixed costs