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Chap7AsgnBUS4113

# Chap7AsgnBUS4113 - CONTRIBUTION MARGIN Sales(25,000 X 20...

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Amberton University BUS 4113 – Accounting and Finance for Managers Chapter 7 Assignment Name: Chapter 7 1. Trenton Inc. manufactures a single product. The following information is available for 2009 Number of units produced and sold 25,000 units Sales price per unit \$20 per unit Variable manufacturing costs \$8 per unit Variable selling and administrative costs \$2 per unit Total fixed manufacturing costs \$10,000 Total fixed selling and administrative costs \$8,000 Required : A. Prepare a traditional format income statement (ignore taxes). TRADITIONAL Sales (25,000 X 20) \$500,000 Less: Cost of goods sold: Variable costs (8 X 25,000) + (2 X 25,000) = \$250,000 Fixed costs 10,000 + 8,000 = 18,000 Total cost of goods sold 268,000 Gross profit \$ 232,000 (Taxes ignored) Net Income \$ 232,000 B. Prepare a contribution margin format income statement (ignore taxes).

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Unformatted text preview: CONTRIBUTION MARGIN Sales (25,000 X 20) \$500,000 Less: Variable costs (8 X 25,000) + (2 X 25,000) = \$250,000 Contribution Margin 250,000 Less: Fixed Cost 18,000 10,000 + 8,000 (Taxes ignored) Net Income \$ 232,000 2. Vincent Products manufactures a particular item with the following information: Sales price \$80 per unit Variable costs \$30 per unit Fixed Costs \$5 per unit Units produced and sold 10,000 Required : Calculate the following based on the above information: A. Contribution margin per unit 80 – 30 = \$50 / unit B. Contribution margin ratio (80 X 10,000) – (30 X 10,000) / (80 X 10,000) = 0.625 = 62.5% Or 50 / 80 = 0.625 = 62.5% C. Break-even point in units (5 X 10,000) / 50 = 1,000 units D. Break-even point in sales dollars (5 X 10,000) / 62.5% = \$80,000...
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Chap7AsgnBUS4113 - CONTRIBUTION MARGIN Sales(25,000 X 20...

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