Question

on any prout me company's sales and expenses for last month follow. Per Unit Sales Variable expenses Contribution margin Pixed expenses Net operating income Total 5 636,000 445,200 190,800 153,600 $ 37,200 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each month to attain a target profit of $62.400? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 5. What is the company's CM ratio? If sales increase by $59,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Reg 38 Reg 4 Req 5 What is the monthly break-even point in unit sales and in dollar sales? units Break-even point in unit sales Break-even point in dollar sales Reg 2 > < Prey 2 of 2 Next >

Answer 1

Given, mento company sales and Expenses for the month Totel Peronit Sales $636,000 $10 variable Erepenses $145,200 $98 $12 fixed Expenses Contributions Masina $190,800 $153,600 nef operating on come * $77,800 1. Breack Even foint!: formula a & in bouts fixed Expenses Contribution Perunit fixed Expenses DAL Deti in dollars = Profit volume Ratio (plv) Contribution xoo Sales $190,800 wlop $636,000 30%, Ox 0.30 $445, 200 -99 .37,100 unita Brek Even point = Cinunils

Brek Even Point in dollars) 3 $445,200 0.30 - $ 1,486,000 2. Contribution margin at Break Even point: Contribution margin = Contribution No. of units margin Plu & sold = $12% 37,100 No. of units sold af Break Even point = 37,100 triki Totul Contribution Margin = $4485,200 at Break Even point 3. How many unila so led to attain a target Profit of $62 400 Required sales fixed costo + Targeted Dofile Cin unsts) Contribution margin Plus $153,600+$62,400 $12 Vequired Sales linuwih= 18,000 unita 18,000 units required sales to attain profit of $62,400

at in Come statiment sales in 18.000 units - Rasti aulass Sales (18,000 units x $40 variable Cost (18,000 units X $28) Amount ($) $720,000 les $ 504,0 less: Contribution margin - $ 216,000 $ 153,600 fixed cost Net operating Income $62.400 4. margin of Safety formular en units fixed Cost - Contribution Perunit in dollars fixed cost Profil volume Ratio fixed Cost = $153,600 Contribution plu= $12 Pr Ratio = 30). margin of safety, an units : $153,600 in dollass = $153,600 to -$5)2,000

2. Contribution margin Ratio if sales encreased by $59,000 Per mouth Particulars Amount ($) Current month Sales $636,000 + Increase in Sales $ 59,000 $ 695,000 ($ 486,500) less, variable cost 1.NO!:)) $208,500 Contribution margin = $ 153,600 las fired cost $54,900 Net Operating income W.. Variable cost $695,000 - $486,500/- Be3445,200 $636,000 con Cissent years variable Cost = $ 445,200 + Increase sales $59,000 in voily - 1,475 (959,000 ) = $ 41,300 = 1,475 Units x $28 variable Cost at Increase in Sale $ 4, 86,500 - wet operating on Come Encresed Of $ 17,700

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