Question

iler Metal Co makes a singla product that sells for $41.5 per unt Variable costs are $27.9 per unit, and fxed costs total $65 905 per month Caleulate the number of units that must be sold each month for the fam o break-even. (Do net round intermediate calculations) b. Assume ourrent salea aro 5416,000 Calbulate the margin of safoty and the margin of safery ratio. (Round intarmediate calculations to the nearest whole numbor.] Margin of sofety Margin of safety rat o Calculato oparating income i 6,400 units are soid in a month. (Do not round intermediate caloulations. d. Calculate operating noom@げta Gal price ls raised to $44.5 per unit, advertising ฉ pe dtuosa noo ased by $10 000 per mont and month unit salos volume becomes 7.200 its. o not round ine adate calculations. Operiting Pecome GGume that ta rm adds another produ㏄ to bs product line and that the na product als tor S22 per u it, has variab costs of S 15 per unit, and causes tad ฉ penses in toal ⑩ increase to S5 000 per month. Calculate the fin 's operating income soid aach month. For the original product, use tha solling price and variable cost data gven in the proclom stacament. (Do not round intermediate caleulations) 6,400 units of the ong na product and 4,100 unts of the new product

Answer 1

Selling price per Unit Variable Cost per unit Contribution per unit Fixed Cost 41.5 27.9 13.6 $85,905 a. Break even point-fixed cost/contribution per unit 6317 Units b. Margin of Safety Actual Sales -break even sales - 85905/13.60 416000-(6317*41.5) $416000-$ 262136 $153863.42 Margin of safety (actual Sales-break even sales)/actual sales 100 - (153863.42)/416000* 100 0.5869 or 58.70% Particulars Amount $ 2,65,600 Less: Variable Cost(6400*27.9)$ 1,78,560 $87,040 $ 85,905 1,135 Sales(6400 *41.50) Contribution Less: fixed cost Operating Income

d. Particulars Amount $ 3,20,400 $ 2,00,880 $10,000 $1,09,520 $ 85,905 $23,615 Sales(7200*44.50) Less:| Variable Cost (7200*27.9) advertising expenses Less: |Contribution fixed cost Operating Income Particulars Amount $3,55,800 2,40,060 $1,15,740 $ 1,67,905 $-52,165 Sales(6400*41.5+22 4100) Variable Cost(6400 27.9+15*4100) Contribution fixed cost(85905+82000) Operating Income