Last month McAlister Company had a $60,000 loss on sales of $300,000. Fixed costs are $120,000...
Last month McAlister Company had a $60,000 loss on sales of
$300,000. Fixed costs are $120,000 a month. Answer the following
questions:
a. What was the contribution margin percentage?
b. What monthly sales volume (in dollars) would be needed to
break-even?
c. What sales volume (in dollars) would be needed to earn
$150,000?
Homework Answers
| a) contribution margin % = loss on sale+fixed cost/sale | |||||||
| contribution margin % = 60000/300000 = 20% | |||||||
| b) breakeven sale = fixesd cost/contribution marginratio | |||||||
| breakeven sale = 120000/20% = 600000 | |||||||
| c) sale volume (in dollars) = (desired profit +fixed cost)/contribution margin ratio | |||||||
| sale volume (in dollars ) = (150000+120000)/20% | |||||||
| sale volume (in dollars ) = 1350000 |
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