WATER WAY ANSERS B

WATER WAY ANSERS B -...

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(1) What is the product’s contribution margin ratio? 2937120-2053200/2937120 = .3 or 30% (2) What is the company’s break-even point in units and in dollars for this product?  (3) What is the margin of safety, both in dollars and as a ratio?  (4) If management wanted to increase its income from this product by 10%, how many additional u (A) Waterways markets a simple water control and timer that it mass-produces. During the year, the sold 696,000 units at an average selling price of $4.22 per unit. The variable expenses were $2,053 the fixed expenses were $683,338.  683338/.3 = $2277793 2277793/4.22 = 539761 units 2937120-2277793 = $659327 659327/2937120  = .2245 or 22.45% Present income 2937120 x .3 =881136-683338= 197798 Targeted income  =  197798 x  1.1 = 217578 Sales should be = 683338+217578.3 = $3003052 Sales in units = 3003052/4.22 = 711624 – 696000 = 15624 additional unit
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71090 x 4.22 = 300000 x .3 =$90000 additional net income
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This note was uploaded on 01/27/2011 for the course RELIGON 255 taught by Professor Atkins during the Spring '10 term at Grand Canyon.

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WATER WAY ANSERS B -...

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