to 5136,000 compensation amounted Mini-Exercise Prepare a contribution margin fo
ID: 2529361 • Letter: T
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to 5136,000 compensation amounted Mini-Exercise Prepare a contribution margin format income statement China 12.3 sold 18.000 units in May. Per unit selling price and variable expern LO 7 $17, respectively. Fixed expense incurred for May totaled S120,000. 5 and were $25 Required: Prepare the May income statement for China Imports, Inc., in the contribution m Co like format. Mini-Exercise CVP analysis Current operating income for Bay Area Cycles Co. is $70,000. Sellim price per unit is $100,the contribution margin ratio is 35%, and fixed expense is $280.00 12.4 LO B Required: Calculate Bay Area Cycle's per unit variable expense and contribution margin. How many units are currently being sold? How many additional unit sales would be neces- sary to achieve operating income of $105,000? Mini-Exercise Break-even analysis Refer to the current information for Bay Area C ycle Co. in 12.5 Mini-Exercise 12.4. LO 9, 11 Required: Calculate Bay Area Cycle's break-even point in units and total sales dollars Bay Area Cycle's margin of safety and margin of safety ratio rs. CalculaExplanation / Answer
Solution 12.3:
Solution 12.4:
Current operating income = $70,000
Current fixed expense = $280,000
Current contribution marging = $70,000 + $280,000 = $350,000
Contribution margin ratio = 35%
Sales revenue = $350,000 / 35% = $1,000,000
Selling price per unit = $100
Sales units = $1,000,000 / 100 = 10000 units
Variable expenses per unit = $100 * 65% = $65
Per unit contribution margin = $100*35% = $35
Target operating income = $105,000
Target contribution = $105,000 + $280,000 = $385,000
Target unit to be sold = Target contribution / Contribution per unit = $385,000 / $35 = 11000 units
Solution 12.5:
Breakeven point in units = Fixed expenses / contribution per unit = $280,000 / 35 = 8000 units
Breakeven sales in dollar = 8000*$100 = $800,000
Margin of safety = Existing sales - Breakeven sales = $1,000,000 - $800,000 = $200,000
Margin of safety ratio = (Current sales - breakeven sales) / current sales = $200,000 / $1,000,000 = 20%
Contribution margin income statement - China Import Inc. Particulars Amount Sales Revenue (18000*$25) $450,000.00 Variable cost (18000*$17) $306,000.00 Contribution margin $144,000.00 Fixed expenses $120,000.00 Net Operating income $24,000.00Related Questions
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