- For Coronado Industries, sales is $2500000, fixed expenses are $900000, and th
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Question
- For Coronado Industries, sales is $2500000, fixed expenses are $900000, and the contribution margin ratio is 36%. What is required sales in dollars to earn a target net income of $700000?
- Swifty Corporation reported sales of $1600000 last year (80000 units at $20 each), when the break-even point was 72000 units. Swifty’s margin of safety ratio is?
- In 2016, Coronado Industries sold 3000 units at $750 each. Variable expenses were $460 per unit, and fixed expenses were $780000. The same variable expenses per unit and fixed expenses are expected for 2017. If Coronado cuts selling price by 4%, what is Coronado’s break-even point in units for 2017?
- Vaughn Manufacturing sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $165 and a selling price of $210. Q-Drive Plus has variable costs per unit of $180 and a selling price of $255. The weighted-average unit contribution margin for Vaughn is?
- Bramble Corp. sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $150 and a selling price of $210. Q-Drive Plus has variable costs per unit of $165 and a selling price of $255. Bramble’s fixed costs are $729000. How many units of Q-Drive would be sold at the break-even point?
- Crane Company can produce and sell only one of the following two products:
The company has oven capacity of 2250 hours. How much will contribution margin be if it produces only the most profitable product?
- Crane Company has sales of $1000000, variable costs of $400000, and fixed costs of $500000. Crane’s degree of operating leverage is?
- Sheridan Company has sales of $2500000, variable costs of $1000000, and fixed costs of $810000. Sheridan’s margin of safety ratio is?
Oven Contribution Hours Required Margin per Unit Muffins 0.2 $2 Coffee Cakes 0.3 $8Explanation / Answer
1)Desired sales : [Fixed cost +Target income ]/CM ratio
=[900000+700000]/.36
= 1,600,000/.36
= $ 4,444,444.44
2)
Margin of safety sales in units :Actual sales -BEP sales
= 80000-72000
= 8000 units
Margin of safety ratio : Margin of safety sales /actual sales
= 8000/80000
= .10 or 10%
3)Selling price : 750 (1-.04)= 720
Contribution per unit : 720 --460 = 260
BEP(units)= Fixed cost /contribution per unit
= 780000/260
= 3000 units
4)contribution from Q drive :price -variable cost
=210-165 =45
Contribution from Q drive plus : 255-180 = 75
Weighted average contribution margin ratio : [45*.30]+[75*.70]
= 13.5+ 52.5
= 66 per unit
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