Ella buys a machine for $8,500, less discounts of 20% and 15%. The overhead expe

Question

Ella buys a machine for $8,500, less discounts of 20% and 15%. The overhead expenses are 8% on cost and she plans to make a profit of 60% on the cost. a) What is the regular selling price? b) What is the profit or loss if she offers in markdown of 22%? c) What is the maximum markdown rate she can offer to sell at the breakeven price?

A magazine company has the capacity to print and sell 200,000 magazines per month. It sells each magazine for $4.50 each, has fixed costs about $520,000 per month, and variable cost of $0.50 per magazine. a) Calculate the contribution margin and contribution ratio. b) What sales amount will result in a net income of $21,000? c) What will be the net income at capacity

Explanation / Answer

after discount it is=8500*(1-20%)*(1-5%)=5780
overhead expense=5780*1.08=462.40
profit on said machine=60%*(5780+462.40)=3745.55
selling price=5780+462.4+3745.55=9987.95

I am solving second question
a)contribution margin=selling price-var costs
=4.5-0.5=4
contribution ratio=contribution margin/sales
=4/4.5=88.89%
b)Net income=(sales-var)-fixed. let sales units be x
21000=(4x)-520000
x=(21000+520000)/4=135250

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