Lesson #4, Assignment #2

# Lesson #4, Assignment #2 - Student Name Class Problem 6-19...

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Class: Problem 6-19 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 \$20 Variable expense 14 Fixed expense 90,000 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! Break-even point (dollars) \$300,000 Correct! 2. Incremental contribution margin: Increased sales \$21,000 Less increase advertising cost 8,000 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 Variable expenses 378,000 Contribution margin 108,000 Fixed expenses 125,000 Net loss (\$17,000) Correct! 4. Units sold to reach target profit: Sales 20Q Variable expenses 14.60Q Fixed expenses 90,000 Profits 4,500 Number of units 17,500 Correct! Alternative calculation:

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## This note was uploaded on 02/06/2011 for the course COMM 611 taught by Professor Mark during the Spring '11 term at Antelope Valley College.

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Lesson #4, Assignment #2 - Student Name Class Problem 6-19...

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