Zaldor Corporation sells a specialized speaker and has the following information
ID: 2338192 • Letter: Z
Question
Zaldor Corporation sells a specialized speaker and has the following information for the current year:
Required:
A. Calculate the variable expense ratio
B. Calculate the contribution margin ratio
C. Calculate break-even sales in units
D. Calculate break-even sales in dollars
E. How many units must be sold to make a profit of $300,000?
Total Per Unit Percent of Sales Sales (20,000 units) 1,200,000 60 100% Variable expenses 800,000 40 ? % Contribution margin 400,000 20 ? % Fixed expenses 250,000 Net operating income 150,000Explanation / Answer
a. variable expense ratio=Variable expense/Sales
=(800.000/1,200,000)=66.67%(Approx)
b.contribution margin ratio=contribution margin/Sales
=(400,000/1,200,000)=33.33%(Approx)
c.Breakeven point=Fixed expenses/contribution margin
=(250,000/20)=12500 units
d.Breakeven value=Fixed expenses/contribution margin ratio
=(250,000/33.33%)=750,000
e.Target contribution margin=Fixed expenses+Target profits
=(250000+300,000)=$550,000
Hence units to be sokd=(550,000/20)
=27500 units.
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