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12_takehome_chapter 6_soln

# 12_takehome_chapter 6_soln - Acc 200P Name_KEY Chapter 6...

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Acc 200P Name: ______ KEY ________________________ Chapter 6 Take-home Quiz Problem I: (20 pts) A. Prepare a traditional format income statement. Ignore taxes. ( Check figure : Net income = \$232,000) Sales (25,000 units x \$20 per unit) \$500,000 Less: CGS [(25,000 units x \$8 per unit) + \$10,000) (210,000) Gross profit 290,000 Less: Selling and Admin. Costs [(25,000 x \$2 per unit) + \$8,000] (58,000) Net income \$232,000 B. Prepare a contribution margin format income statement. Ignore taxes. Sales (25,000 units x \$20 per unit) \$500,000 Less: VC (25,000 units x \$10 per unit) (250,000) Contribution margin 250,000 Less: FC (18,000) Net income \$232,000 Problem II: (60 pts) A. What is the contribution margin per unit? Answer: \$_ 49 __ per unit CM per unit = \$70 - \$21 = \$49 B. What is the contribution margin ratio? Answer: _ 70 % ( or .70) CM ratio = CM/Sales CM ratio = 49/70 = 70% (or .70) C. Fill in the blank: “For each additional unit sold, net income will increase by \$_ 49 _”. D. What is the company’s break-even point in terms of units? Answer: _ 400 _ units BE units = FC ÷ CM per unit BE units = \$19,600 ÷ \$49 = 400 units

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E. What is the company’s break-even point in terms of sales dollars? Answer: \$_ 28,000 ___ BE sales dollars = FC ÷ CM ratio BE sales dollars = \$19,600 ÷ .70 = \$28,000 Or
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