mini project 2

mini project 2 - Sales Revenue (73,000 * 12.50) $912,500...

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Aundi Moore Accounting 2 Section 004 ED 120 October 5, 2010 Mini Project 2 Requirement 1 Break-even Contribution Margin = Fixed Cost - Variable Cost = 12.50 - 5.50 = 7 Break-even Formula = Fixed Cost / Unit Contribution Margin = 588,000 / 7 = 84,000 Flags Requirement 2 Contribution Margin Ratio = Contribution margin per unit / unit sales price = 12.50 – 5.50 / 12.50 = 0.56 Sales Volume in $ = Fixed Cost + Target OI / CM Ratio = 588,000 + 32,200 / 0.56 = $1,107,500.00 Required dollar sales to earn operating Income for 2011 Target operating Income $3,200 Fixed cost $588,000 Total required contribution margin $591,200 Contribution margin ratio 56% Required dollar sales $1,107,500.00
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Requirement 3 Allen’s Company Income statement For period ending December 31, 2011
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Unformatted text preview: Sales Revenue (73,000 * 12.50) $912,500 Cost Expense: Fixed Cost $588,000 Variable Cost (13,000 *5.50) (401,500) COGS (0.6 * Variable Cost) 240,900 Operating Income 83,600 Requirement 4 Break-even in units and dollars 588,000 * .60 = 117,600 +588,000 _________ 705,600 = New Fixed Cost Variable Cost = 5.5 + .60 = $6.10 CM Unit = Sales Variable Cost = 12.50 6.10 = 6.40 CM Ratio = CM per unit / unit sales price = 6.40 / 12.50 = 51.2% Breakeven = Fixed Cost / CM Unit = 705,600 / 6.40 = 11,200 Flags Breakeven $ = Fixed Cost / CM Ratio = 705,600 / 51.2% = $1,378,125.00 Allen Company should go for the expansion because the break-even unit and dollar about is greater than it was when they started....
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This note was uploaded on 07/28/2011 for the course ACG 2071-001 taught by Professor Staff during the Fall '10 term at FAU.

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mini project 2 - Sales Revenue (73,000 * 12.50) $912,500...

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