221_Solutions_Chap_3_Fa_05

221_Solutions_Chap_3_Fa_05 - E3-13 a.Manitoba Company...

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Unformatted text preview: E3-13 a.Manitoba Company Contribution Income Statement For the Month of May 2007 Sales (6,000 ×$50) $300,000 Less variable costs: Direct materials (6,000 ×$5) $ 30,000 Direct labor (6,000 ×$10) 60,000 Factory overhead (6,000 ×$10) 60,000 Selling and administrative (6,000 ×$5) 30,000(180,000)Contribution margin $120,000 Less fixed costs: Factory overhead $ 40,000 Selling and administrative 20,000(60,000)Profit $ 60,000b.$0$50,000$100,000$150,000$200,000$250,000$300,000$350,0002,0004,0006,0008,000 10,000Unit salesTotal revenues and Total costsNote:The instructor might extend this assignment in class, computing the break-even point, the margin of safety, and the impact on profits of a change in sales. Variable costs = $180,000 Fixed costs = $60,000 Profit = $60,000 E3-15a.Sales $750,000 Variable costs (412,500) Contribution margin $337,500Contribution margin ratio = $337,500/$750,000 = 0.45 Annual break-even dollar sales volume = $210,000/0.45 = $466,667b.Annual margin of safety in dollars: Sales $750,000 Break-even sales dollars (466,667) Margin of safety $283,333c.To determine the variable and total costs lines, it is necessary to compute the variable cost ratio: Variable = variable costs= $412,500= 0.55 cost ratio sales $750,000 At a volume of $1,000,000 sales dollars, variable costs are $550,000. $0$250,000$500,000$750,000$1,000,000$0$250,000$500,000$750,000$1,000,000 $1,250,000Total RevenuesTotal Revenues and Total Costsd.Revised annual break-even dollar sales: ($210,000 + $35,000)/0.45 = $544,444Variable costs = $412,500 Fixed costs = $210,000 Profit = $127,500 E3-16a. 1. Total variable costs 2. Total revenue 3. Total costs 4. Variable costs 5. Fixed costs 6. Total costs 7. Contribution margin 8. Break-even unit sales volume 9. Loss area 10. Profit area b.Line CCLine ORBreak-Even Point...
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This homework help was uploaded on 02/19/2008 for the course H ADM 221 taught by Professor Gpotter during the Spring '05 term at Cornell.

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221_Solutions_Chap_3_Fa_05 - E3-13 a.Manitoba Company...

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