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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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