Assignment
#2:
Show your work to get any partial
credit. Give me the formula that you might use or show other thought
process. If you just give me an answer and it’s not the right one, you will get
zero points for that question.
Other formulas needed outside of the
reading material:
Sales = Variable expenses + Fixed
expenses +Profit
Sales = Quantity * Units
Profit = (Sales × CM ratio) – Fixed
Cost
Review
Problems : Contribution margin and ratio
Problem
1:
Sales per unit = $250
Variable Cost per unit = $150
Units = 350
Problem
2:
Sales = $5,000,000
CM Ratio = 0.40
Fixed cost = $1,600,000
Problem 3:
A company has budgeted sales of $200,000, a
profit of $60,000 and fixed expenses of $40,000.
Review
Problem : Break-even point
Problem 4:
Voltar Company manufactures and
sells a telephone answering machine. The company’s contribution format income
statement for the most recent year is given below:
Total | Per unit | Pct. of sales (Ratios) | |
Sales | $1,200,000 | $60 | 100% |
Less variable expenses | 900,000 | 45 | ?% |
——– | ——– | ——– | |
Contribution margin | 300,000 | 15 | ?% |
Less fixed expenses | 240,000 | ====== | ====== |
——– | |||
Net operating income | $60,000 | ||
====== |
Problem 5:
Management is anxious to improve the
company’s profit performance. Assume that next year management wants the
company to earn a minimum profit of $90,000.
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