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Question

à Secure | https//xlitemprod pearsoncmg.com/api/v1/print/accounting Student: Thomas Davis Date: 07/1218 Instructor Shahbaz Shahba Course: Bus 1B Memtt Online SU 2018 Print mpeny manufactres end sels a single product The company's sales and expenses for last year tollows Cack the icon to view the information) Road the Requirement 1. Fill in the missing numbers in the table Use the tolowing questions to holp fillin the missing numbers in the table a. What is the total contribution margn? The total contribution margin is S b. What is the total variable expense? The total variable expense is $ c. How many units were sold? unts were sold d. What is the per-unit variable expense? The per und variable expense is S e. What is the per-unit contribution margin? The per-unit contribution margin is $ Now fill n the missing numbers in me table Enter the percentages as whoe numbers Total Per Unit $ 150,000 $ 30 Sales Variable expenses Contrbution margn Fxed expenses Operating ncome 13,500 16,500 irement 2. Answer the following questions about breakeven analysis a. What is the breakeven point in units? Begin by identlying the foemula to compute the breakeven point in unts 7/12/2018

Explanation / Answer

(1) (a) Total Contribution Margin = Operating Income + Fixed Exp

= 16500 + 13500 = $30000

(b) Total Variable Exp = Sales – Contribution

= 150000 – 30000 = 120000

(c) Units sold = Total sales/SP pu

= 150000/30 = 5000

(d) Variable Exp pu = Total Variable exp/Units sold

= 120000/5000 = 24

(e) Contribution margin pu = SP pu – VC pu

= 30 – 24 = 6

Total

Per Unit

Sales

150000

100 %

Variable Exp

120000

80%

Contribution Margin

30000

20%

Fixed Exp

13500

Operating Income

16500

(2) (a) BEP (in units)

[(1)Fixed Exp + (2)-----------] / (3) Contribution margin pu = Break Even Sales in units

= 13500/6 = 2250 units

(b) BEP (in $) =

[(4)Fixed Exp + (5)-----------] / (6) Contribution margin ratio = Break Even Sales in dollars

= 13500/20% = $67500

(3) (a) Target Profit = 48000

Units sold (SP – VC) – FC = Target Profit

Let X be the units sold

X (30 – 24) – 13500 = 48000

X = 10250 units

(b) Margin of safety units =

[(7) Budgeted Sales in unit - (8) Break Even Sales in Units] = Margin of safety in units

= 5000 – 2250 = 2750 units

(c) Margin of Safety (in $):-

[(9) Budgeted Sales in $ - (10) Break Even sales in $] = Margin of safety in $

= 150000 – 67500 = 82500

(d) Margin of Safety in % :-

[(11) Margin of safety in $ / (12) Budgeted sales in $] = Margin of Safety as % of Budgeted Sales

= 82500/150000 = 55%