MidtermPractice_6-16(2)

# MidtermPractice_6-16(2) - \$216,000 in fixed expenses...

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Exercise 6-16 Total Per Unit Sales \$450,000 \$30 Variable Expenses 180,000 12 Contribution Margin 270,000 \$18 Fixed Expenses 216,000 Net Operating Income \$54,000 Break-even point in units sold: Fixed expenses / Unit CM = 216,000/ \$18 = 12,000 Break-even point in total sales dollars: 12,000 units x \$30 selling price = \$360,000 Total CM at the break- even point: \$216,000 (CM needs to be equal to fixed expenses in order to have zero profit.) Units to be sold in order to earn a \$90,000 target profit:
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Unformatted text preview: \$216,000 in fixed expenses + \$90,000 target profit = \$306,000 \$306,000 / \$18 unit CM = 17,000 units Margin of Safety in dollars: Total Current Sales - Break Even Sales = 450,000 - 360,000 = \$90,000 Margin of Safety Percentage: Margin of Safety in dollars / Total Sales = \$90,000 / \$450,000 = 20% CM Ratio: CM / Sales = \$270,000 / \$450,000 = 60% If sales increase by \$50,000, how much would we expect NOI to increase? \$50,000 x 60% CM ratio = \$30,000...
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## This note was uploaded on 04/16/2008 for the course ACCT 202 taught by Professor Adams during the Spring '08 term at CSU Chico.

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