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BA511-L4A2

# BA511-L4A2 - Student Name Class MEMOFAX INC 1 Contribution...

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Student Name: Class: MEMOFAX, INC. 1. Contribution margin ratio: Percent Total Per Unit of Sales Sales \$270,000 \$20 100% Variable expenses 189,000 14 70% Contribution margin \$81,000 \$6 30% Break-even point: Sales \$300,000 Sales = Variable expen Variable expense 210,000 20x = 14x + 90000 + 0 Fixed expense 90,000 15000 Profits 0 Break-even point (units) 15,000 Correct! Break-even point (dollars) \$300,000 Correct! Alternative break-even point calculation: Break-even point (units) 15,000 Correct! Units sold = fixed expen Break-even point (dollars) \$300,000 Correct! 2. Incremental contribution margin: Increased sales \$70,000 Net Income = sales/con Less increase advertising cost 8,000 \$21,000 Increase in monthly net income \$13,000 Correct! Current loss per month (\$9,000) Add increase 13,000 Total income per month \$4,000 3. Sales \$486,000 Per unit = 18 Variable expenses 378,000 13500 27000 Contribution margin 108,000 Fixed expenses 125,000 Net loss (\$17,000) Correct! 4. Units sold to reach target profit: Sales \$350,000.00 Variable expenses 245,000.00 Sales = Variable + fixed Fixed expenses 90,000 20x = 14.6x + 90000 + 4 Profits 4,500 \$17,500.0 Number of units 17,500 Correct!

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BA511-L4A2 - Student Name Class MEMOFAX INC 1 Contribution...

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