can anyone answer this question ASAP, please? 3. Metro Company\'s most recent co

Question

can anyone answer this question ASAP, please?

3. Metro Company's most recent contribu tion format income statement is presented below: Sales $1,400,000 900,000 500,000 300,000 $200,000 Less variable expenses Contribution margin Less fixed expenses Net operating income he com pany has no beginning or ending inventories and produced and sold 10,000 units during the month. Required: a. What is the company's contribution margin ratio? b. Compute the company's break-even point in units. c. C d. Compute the total variable expenses at the break-even point. e. How many units would have to be sold to earn a target profit of $225,000? f. The sales manager is convinced that a $30,000 increase in the advertising budget would ompute the company's break-even point in sales dollars. increase total sales by $56,000. Would you advise the increased advertising outlay?

Explanation / Answer

a. Company's Contribution Margin Ratio = Contribution Margin / Sales *100

= $ 500,000 / $ 1,400,000 *100

= 35.71%

b. Company's Break Even Point In Units = Fixed Cost / Contribution Margin Per Unit

= $ 300,000 / ( $ 500,000 / 10,000 Units)

= 6,000 Units

c. Company's Break Even Point In Dollars = Fixed Cost / Contribution Margin Ratio

= $ 300,000 / 35.7142857%

= $ 840,000

d. Total Variable Expenses at the Break Even Point = Break Even Sales in Dollars* (100% - Contribution Margin Ratio)

= $ 840,000* (100% -35.7142857%)

= $ 540,000

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