Homework Answers
| 1 | Morton Company | ||||||
| Contribution Income Statement | |||||||
| Present | Proposed | ||||||
| Amount | Per unit | % | Amount | Per unit | % | ||
| Sales | $ 8,61,000 | $ 21.00 | 100% | $ 8,61,000 | $ 21.00 | 100% | |
| Variable cost | $ 6,02,700 | $ 14.70 | 70% | $ 3,44,400 | $ 8.40 | 40% | |
| Contribution Margin | $ 2,58,300 | $ 6.30 | 30% | $ 5,16,600 | $ 12.60 | 60% | |
| Fixed expenses | $ 2,06,640 | $ 4,64,940 | |||||
| Net Operating Income | $ 51,660 | $ 51,660 | |||||
| 2 | |||||||
| Present | Proposed | ||||||
| a. | Degree of Operating Leverage | 5 | 10 | ||||
| b. | Break - even point in dollar sales | $ 6,88,800 | $ 7,74,900 | ||||
| c. | Margin of Safety in dollar sales | $ 1,72,200 | $ 86,100 | ||||
| Margin of Safety in percentage | 20% | 10% | |||||
| Workings: | |||||||
| (a) | Contribution Margin | $ 2,58,300 | $ 5,16,600 | ||||
| (b) | Net Operating Income | $ 51,660 | $ 51,660 | ||||
| (a) / (b) | Degree of Operating Leverage | 5.00 | 10.00 | ||||
| b. | Present | Proposed | |||||
| (a) | Fixed expenses | $ 2,06,640 | $ 4,64,940 | ||||
| (b) | Contribution Margin ratio | 30% | 60% | ||||
| (a) / (b) | Break - even point in dollar sales | $ 6,88,800 | $ 7,74,900 | ||||
| c. | Present | Proposed | |||||
| Sales | $ 8,61,000 | $ 8,61,000 | |||||
| Less: | Break - even point in dollar sales | $ 6,88,800 | $ 7,74,900 | ||||
| Margin of Safety in dollar sales | $ 1,72,200 | $ 86,100 | |||||
| (a) | Margin of Safety in dollar sales | $ 1,72,200 | $ 86,100 | ||||
| (b) | Sales | $ 8,61,000 | $ 8,61,000 | ||||
| (a) / (b) | Margin of Safety in percentage | 20% | 10% | ||||
| 3 | Cyclical movement in the economy | ||||||
| 4 | Break - even point in dollar sales | $ 11,52,398 | |||||
| Workings: | |||||||
| (a) | Fixed expenses | $ 3,29,763 | |||||
| (b) | Contribution Margin ratio | 29% | |||||
| (a) / (b) | Break - even point in dollar sales | $ 11,52,398 | |||||
|
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Morton Company's contribution format income statement for last month is given below: $ Sales (41,000 units X $21 per unit) Variable expenses Contribution margin Fixed expenses Net operating income 861,000 602,700 258,300 206,640 51,660 $ The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits....
Morton Company's contribution format income statement for last month is given below: Sales (50,000 units * $28 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $ $ 1,400,000 980,000 420,000 336,000 $ 84,000 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving...
Morton Company's contribution format income statement for last month is given below Sales (46,000 unite x $29 per unit) 1,334,000 Variable expenses Contribution margin Fixed expenses Net operating income 933, 800 400,200 320,160 $80,040 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused cappcity and is studying ways of improving profits Required:...
Morton Company's contribution format income statement for last month is given below: $450,000 Sales (15,000 units * $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating income 315,000 135,000 90,000 $ 45,000 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required:...
Morton Company's contribution format income statement for last month is given below: Sales (50,000 units * $28 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,400,000 980,000 420,000 336,000 $ 84,000 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits....
Morton Company's contribution format income statement for last month is given below: Sales (15,000 units X $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $450,000 315,000 135,000 90,000 $ 45,000 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required:...
Morton Company's contribution format income statement for last month is given below: Sales (48,000 units * $27 per unit) Variable expenses Contribution margin Pixed expenses Net operating income $ 1,296,000 907, 200 388,800 311,040 77,760 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits....
Morton Company’s contribution format income statement for last
month is given below:
Sales (44,000 units × $28 per unit)
$
1,232,000
Variable expenses
862,400
Contribution margin
369,600
Fixed expenses
295,680
Net operating income
$
73,920
The industry in which Morton Company operates is quite sensitive
to cyclical movements in the economy. Thus, profits vary
considerably from year to year according to general economic
conditions. The company has a large amount of unused capacity and
is studying ways of improving profits....