C22_WCP solution_SV

# C22_WCP solution_SV - SOLUTION Chapter 22 Waterways...

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SOLUTION Chapter 22 Waterways Continuing Problem WCP22 ( Note: All figures are rounded.) (a) (1) The contribution margin ratio is 30% (\$883,920 ÷ \$2,937,120): Waterways Corporation Contribution Margin Income Statement for Water Control and Timer For the Year Unit Cost Sales (696,000 units) \$2,937,120 \$4.22 100% Variable expenses 2,053,200 2.95 70% Contribution margin 883,920 1.27 30% Fixed Expenses 683,338 Net income from product \$ 200,582 (2) Break-even point in units = 538,061 units Fixed expenses \$683,338 Unit CM \$1.27 = 538,061 units (rounded) Break-even point in dollars = \$2,277,793 Fixed expenses \$683,338 CM ratio .30 = \$2,277,793 (rounded) (3) Margin of safety in dollars = \$659,327 Sales \$2,937,120 Less: Break-even in dollars 2,277,793 \$ 659,327 Margin of safety ratio = 22.45% Margin of safety in dollars \$659,327 Sales \$2,937,120 = 22.45% 22-1

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(4) Waterways would have to sell an additional 15,794 units. 10% increase in income =
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C22_WCP solution_SV - SOLUTION Chapter 22 Waterways...

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