Homework Answers
| Req a: | |||||
| Selling price | 16 | ||||
| Less: variable cost | 9 | ||||
| CM per unit | 7 | ||||
| Req b: | |||||
| Break even units: fixed cost / CMm per unit | |||||
| 80000/7 = 11429 units | |||||
| Req c: | |||||
| CM ratio = CM per unit/ Selling price *100 | |||||
| 7/16 *100 = 43.75 per unit | |||||
| Break even in $ = Fixed cost/ CM ratio | |||||
| 80000 / 43.75% = $ 182857 | |||||
| Req d: | |||||
| Target after tax income = 35000 | |||||
| Pre tax income = 35000 /70% = 50000 | |||||
| Desired contribution = 80000+50000 = 130000 | |||||
| target sales in $ = Desired contribution / CM ratio | |||||
| 130000 /43.75% = $ 297143 | |||||
| Req e: | |||||
| Salles | 420000 | ||||
| Cm ratio | 43.75% | ||||
| Contribution | 183750 | ||||
| Less: Fixed cosot | 80000 | ||||
| Pre tax income | 103750 | ||||
| Less: Tax @ 30% | 31125 | ||||
| After tax income | 72625 | ||||
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Required
Determine the break-even point in units and dollars using each
of the following approaches:
Use the equation method.
Use the contribution margin per unit approach.
Prepare a contribution margin income statement for the...
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