Test aspa testld 1830149548acenterveinzyes Patricia Kamara& 7/14/18 Principles o

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Test aspa testld 1830149548acenterveinzyes Patricia Kamara& 7/14/18 Principles of Accounting I ACCT 11 40 Test: Quiz CVP Chapter 20 This Test: 4 p This Question: 1 p 4 of 4 (3 complete) The budgets of four companies yield the following information EB(Click the icon to view the budget information for the four companies) Read the tea tements Requirement 1.Filin the blanks for each missing value(Round the contribution margn per unit to the nearest cent Use a minus sign or parentheses to enter an operaing loss) Baker Doren Data Table Net Sales Reverue s 3,700 000 8 288,000 8,750 78.000 Variable Costs Fond Costs Operating Income (Loss 208 000 260.000 93205 $ 60 500 5 558,600 200,000 3.70 Everest Units Sold 12.500 Net Saies Revenue Variable Costs Fxed Costs $ 3,700,000 d 288.000 a) 68,750 144.000 (b) 208,000 260,000 s 7200 15.00 Contribuition Margin per Units Contribution Margin Ratio 8,000 50 % Requirements 2 and 3. which company has the lowest breakeven point in sa'es dolars? What causes the low Begin by showing the tormula 558 600 ) 200,000 12.500 breakewt Operating income (oss) S (a) 60.500 and then entering the amounts to calculate the breakeven point in sales dollans for each uted CM- Requred sales in dollians 7200 margin ) 15.00 Contrbution Margin per Unit Contribution Margin Rato nearest whole dollar For example, $10 25 would be rounded to $11. Abbreviation 370 m 1 Which conpany r has the l tresheven point i n saies dolars? the input fields What causes the low breakeven pent? to the next question Esc Home End

Explanation / Answer

Baker

(a) Variable cost = Sales - Contribution = 3700,000 - 200,000 * 3.7 = 2960,000

(b) Fixed cost = contribution - Operating Income = 740,000 - 558600 = 181,400

(c) Contribution margin ratio = Contribution / Sales * 100 = 740,000 / 3700,000 * 100 = 20%

Carey

(d) Sales = Variable cost / ( 1 - CM ratio) = 68750 / ( 1 - 0.80 ) = 343750

(e) Operating Income = Sales * CM ratio - Fixed cost = 343750 * 0.80 - 208000 = 67000

(f) Contribution margin per Unit = 343750 * 0.80 / 12500 = 22

Doren

(g) Operating loss = 288000 - 144000 - 260,000 = 116000

(h) Units sold = Total contribution / Unit contribution = 144000 / 72 = 2000

(i) Contribution margin ratio = 144000 / 288000 * 100 = 50%

Everest

(j) Sales = Variable cost / ( 1 - CM ratio) = 78000 / ( 1 - 0.50) = 156000

(k) Fixed cost = Contribution - Operating Income = 78000 - 60500 = 17500

(l) Units sold = 78000 / 15 = 5200

Formula

(Fixed cost + Desired profit ) / CM ratio = Required sales in dollars

Baker = ( 181,400 + 0 ) / 0.20 = 907000

Carey = ( 208000 + 0 ) / 0.80 = 260000

Doren = (260,000 + 0) / 0.50 = 520,000

Everest = (17500 + 0 ) / 0.50 = 35000

Everest is having lowest Break even point in dollars, because it had lowest fixed cost and good CM ratio as well.

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