Chapter 5 Class Exercises(1) - Exercise 5-6 Mauro Products distributes a single product a woven basket whose selling price is \$26 and whose variable

# Chapter 5 Class Exercises(1) - Exercise 5-6 Mauro Products...

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Exercise 5-6 Profit = (Unit CM * Q) - Fixed Expenses \$0 = ((\$26-\$19.24) * Q) - \$18,252 ÷ \$0 = (\$6.76Q) - \$18,252 \$6.76Q = \$18,252 Q = \$18,252 ÷ \$6.76 Q = 2,700 baskets CM ratio = Unit CM ÷ Unit Selling Price CM ratio = \$6.76 ÷ \$26 CM ratio = 0.26 Profit = (CM ratio * Sales) - Fixed Expenses \$0 = (0.26 * Sales) - \$18,252 0.26 * Sales = \$18,252 Sales = \$18,252 ÷ 0.26 Sales = \$70,200 Unit sales to break even = Fixed Expenses ÷ Unit CM Unit sales to break even = \$18,252 ÷ \$6.76 Unit sales to break even = 2,700 baskets Dollars to break even = Fixed Expenses ÷ CM ratio Dollars to break even = \$18,252 ÷ 0.26 Dollars to break even = \$70,200 Mauro Products distributes a single product, a woven basket whose selling price is \$26 and whose variable expense is \$19.24 per unit. The company’s mo fixed expense is \$18,252. 1. Required: Solve for the company’s break-even point in unit sales using the equation method. (Do not round your intermediate calculations.) - Refer to Slid formula. 2. Required: Solve for the company’s break-even point in dollar sales using the equation method and the CM ratio. (Do not round intermediate calculations. "CM ratio percent" to nearest whole percent.)ration percent to the nearest whole percent.) - Refer to Slide 51 for formula. 3. Required: Solve for the company’s break-even point in unit sales using the formula method. (Do not round your intermediate calculations.) - Refer to Slide formula. 4. Required: Solve for the company’s break-even point in dollar sales using the formula method and the CM ratio. (Do not round intermediate calculations. R "CM ratio percent" to nearest whole percent.) - Refere to Slide 53 for formula. onthly de 48 for Round e 50 for Round Exercise 5-7 Lin Corporation has a single product whose selling price is \$120 and whose variable expense is \$80 per unit. The company’s monthly fixed expense is \$50,000 Profit = (Unit CM * Q) - Fixed Expenses \$10,000 = ((\$120-\$80) * Q) - \$50,000 \$10,000 = (\$40 * Q) - \$50,000 \$40Q = \$10,000 + \$50,000 Q = 1,500 units Units sold to attain target profit = 1,625 units Part 1 - Required: Using the equation method, determine for the unit sales that are required to earn a target profit of \$10,000. - Refer to slide 60 for formula.  #### You've reached the end of your free preview.

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• Fall '08
• CORACI
• • •  