18-9 18-15

# 18-9 18-15 - EXERCISE 18-15 1. Unit sales price =...

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EXERCISE 18-9 (1) Contribution margin per room Contribution margin per room Contribution margin ratio = = = \$60 – (\$8 + \$28) \$24 \$24 ÷ \$60 = 40% Fixed costs = \$7,200 + \$1,500 + \$1,200 + \$300 = \$10,200 Break-even point in rooms = \$10,200 ÷ \$24 = 425 (2) Break-even point in dollars = 425 rooms X \$60 per room = \$25,500 per month OR Fixed costs ÷ Contribution margin ratio = \$10,200 ÷ .40 = \$25,500 per month
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Unformatted text preview: EXERCISE 18-15 1. Unit sales price = \$350,000 ÷ 5,000 units = \$70 Increase selling price to \$77, or (\$70 X 110%). Net income = \$385,000 – \$210,000 – \$90,000 = \$85,000. 2. Reduce variable costs to 55% of sales. Net income = \$350,000 – \$192,500 – \$90,000 = \$67,500. Alternative 1, increasing selling price, will produce the highest net income....
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## This note was uploaded on 07/24/2011 for the course FIN 304 taught by Professor Douard,j during the Spring '11 term at Abu Dhabi University.

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