1. 1- The following information has been provided by Lightning Energy Bars, Inc.
ID: 2374809 • Letter: 1
Question
1. 1- The following information has been provided by Lightning Energy Bars, Inc. for the month of September, when they sold 100,000 units:
Cost of goods sold
$ 600,000
Fixed administrative expenses
220,000
Fixed selling expenses
80,000
Sales
1,500,000
Variable administrative expenses
60,000
Variable selling expense
240,000
(a) What was the company%u2019s TOTAL contribution margin for September?
(b) What was the company%u2019s contribution margin per unit?
(c) What was the company%u2019s CM ratio?
(d) What is the company%u2019s break-even point, in terms of units?
(e) I f the company has a target profit of $600,000, how many units do they need to sell?
2. 2-Fork Plastics has examined its utilities expense for May and June. In May, the company used 2,200 machine-hours and spent $18,600 in utilities. During June the company used 2,650 machine hours and spent $21,300. Assuming utilities can be identified as a mixed cost, Fork uses the high-low method to estimate a line for utilities expense.
What line would estimate utilities?
Please show your work to estimate this line, and write it as Y = a + bx
Cost of goods sold
$ 600,000
Fixed administrative expenses
220,000
Fixed selling expenses
80,000
Sales
1,500,000
Variable administrative expenses
60,000
Variable selling expense
240,000
Explanation / Answer
1) a) Total Contribution Margin = Sales - Total Cost
= 1,500,000 - (600,000+220,000+80,000)
= 600,000
b) Contribution Margin Per Unit = Total Contribution Margin/Units sold
= 600,000/100,000
= 6
c) CM ration = Total Contribution Margin/Sales
= 600,000/1,500,000
= 0.4
d) Break Even Point(in terms of units) = Total Fixed Cost/(Price-Value)
Break Even Point(in terms of units) = Total Fixed Cost X No. of units sold/(Sales-Cost of goods)
Break Even Point(in terms of units) = (220,000+80,000) X 100,000 / (1,500,000-600,000)
Break Even Point(in terms of units) = 300,000/9
Break Even Point(in terms of units) = 33,333
e)No. of units = Total profit/Contribution Margin Per Unit
No. of units = 600,000/6
No. of units = 100,000
2) Y = a + bx
Y1 = a + bx1
18,600 = a + b.2,200
Y2 = a + bx2
21,300 = a + b.2,650
Y2 = a + bx2
-Y1 = a + bx1
----------------------
2,700 = b.450
b = 6
substituing in any eqn. we get
a = 5,400
Y = 5,400 + 6.x
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.