Homework Answers
|
CONTRIBUTION MARGIN STATMENT (CURRENT) |
|||
| TOTAL | PER UNIT | ||
| SALES (240,000 UNITS) | $ 12,00,000.00 | $ 5.00 | |
| LESS: VARIABLE COST | |||
| COST OF GOODS SOLD (75%) | $ 5,76,000 | $ 2.40 | |
| SELLING EXPENSES (42%) | $ 1,17,600.00 | $ 0.49 | |
| ADMINISTRATIVE EXPENSES (40%) | $ 62,400.00 | $ 0.26 | |
| TOTAL VARIABLE COST | $ 7,56,000.00 | $ 3.15 | |
| CONTRIBUTION MARGIN | $ 4,44,000.00 | $ 1.85 | |
| FIXED COST | |||
| COST OF GOODS SOLD (25%) | $ 1,92,000.00 | ||
| SELLING EXPENSES (58%) | $ 1,62,400.00 | ||
| ADMINISTRATIVE EXPENSES(60%) | $ 93,600.00 | ||
| TOTAL FIXED COST | $ 4,48,000.00 | ||
| LOSS | $ -4,000.00 |
1.
| Contribution margin = $1.85/$5 * 100 = 37% |
| Break even points in dollars = fixed cost / contribution margin % |
| =4,48,000/37% |
| Break even points in dollars $ 12,10,811 |
2.
| Net Income | $ 1,02,000.00 |
| BREAKEVEN POINT IN DOLLARS | $ 12,85,509 |
Working:
| 1. COMPUTATION OF NET INCOME UNDER SHERIDAN PROPOSAL | ||
| TOTAL | PER UNIT | |
| SALES(240000*125%) =300,000UNITS | $ 15,75,000.00 | =5 + 0.25 |
| LESS: VARIABLE COST | $ 10,20,000.00 | =3.15+0.25 |
| CONTRIBUTION MARGIN | $ 5,50,000.00 | $ 1.83 |
| TOTAL FIXED COST | $ 4,48,000.00 | |
| Net Income | $ 1,02,000.00 |
| BREAKEVEN POINT IN DOLLARS |
| CM RATIO = CM MARGIN/SALES |
| =1.83/5.25 |
| 0.3485 |
| BREAKVEN POINT IN DOLLARS = FIXED COST/CM RATIO |
| =4,48,000/0.3485 |
| $ 12,85,509 |
3.
| Net Income | $ 78,000.00 |
| BREAKEVEN POINT IN DOLLARS | $ 15,76,947 |
Working:
| COMPUATION OF NET INCOME UNDER PAUL PROPSAL | ||
| TOTAL | PER UNIT | |
| SALES (240000 *160%) 384000UNITS | $ 18,24,000.00 | $ 4.75 |
| LESS: VARIABLE COST | $ 12,48,000.00 | $ 3.25 |
| CONTRIBUTION MARGIN | $ 5,76,000.00 | $ 1.50 |
| TOTAL FIXED COST(448000+50000) | $ 4,98,000.00 | |
| Net Income | $ 78,000.00 |
| COMPUTAION OF BRAEK EVEN POINT IN DOLLARS |
| CM RATIO = 1.50/4.75 = 0.3158 |
| BREAKEVEN POINT = FIXED COST/CM RATIO |
| = 498000 / 0.3158 |
| $ 15,76,947 |
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