Question

UMU Limestone Company produces thin limestone sheets used for cosmetic facing on buildings. The following income statement represents the operating results for the year just ended. The company had sales of 1,800 tons during the year The manufacturing capacity of the firm's facilities is 3,000 tons per year. (Ignore income taxes. ORTO LIMESTONE COMPANY Income Statement For the Year Ended December 31, 20x1 Sales $900,000 Variable costs: Manufacturing $315,000 Selling costs 180,000 Total variable costs $495,000 Contribution margin $405,000 Fixed costs: Manufacturing $100,000 Selling 107,500 Administrative 40.000 Total fixed costs $247.500 Net income $157,500 6. lanore the facts presented in requirement (5). Assume that management estimates that the selling price per ton would decline by percent next year, Variable costs would increase by $40 per ton, and fixed costs would not change Whal sales volume in dolar would be required to earn a net income of $94,500 next year? (Do not round intermediate calculations.) Dollar sales required to earn target net profit

Answer 1

Ohio Limestone company sales of 1800 tons for the year ended December 31, 2011
The manufacturing costs and net income details given for 1800 tons and the manufacturing
capacity is 3000 tons.
Calculation of Sales volume in dollars to get $ 94500 profit when the selling price decline by 10%
and Variable costs increase by $ 40 per ton
	Amount($)	No.of tons	Per ton
Sales	900000	1800	500
Variable cost
Manufacturing	315000	1800	175
Selling costs	180000	1800	100
Total variable costs			275
Sale price per ton	450	Decrease by 10%
Less: Variable costs	315	Increase by $ 40 per ton
	135
Fixed costs	247500	No change
Profit should be	94500
Then the gross profit should be	342000
per ton	135
No of tons to be produced	2533.333
Dollar sales required to earn target net profit of $ 94500	1140000