Ch_4a_Hot_Dog_Operation_-_B

Ch_4a_Hot_Dog_Operation_-_B - Variable Costs Sales = 2,500...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Contribution Format % of Sales Per Unit Sales $2,500 100.0% $2.50 Variable Costs 1,500 60.0% $1.50 Contribution Margin 1,000 40.0% $1.00 Fixed Costs 750 Operating Income $250
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What if we wanted to increase the price so that we would show a profit of $500? Number of Units Sold = 1,000 Contribution Format % of Sales Per Unit Sales Variable Costs Contribution Margin 1,250 Fixed Costs 750 Operating Income $500
Background image of page 2
What if we wanted to increase the price so that we would show a profit of $500? Number of Units Sold = 1,000 Contribution Format % of Sales Per Unit Sales $2,750 100.0% $2.75 Variable Costs 1,500 54.5% $1.50 Contribution Margin 1,250 45.5% $1.25 Fixed Costs 750 Operating Income $500
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Contribution Format Sales - Variable Costs = Contribution Margin % of Sales Per Unit Sales - 1,250 - (10% of Sales) = 1,250 Sales (Sales - 10% of Sales) - 1,250 = 1,250 90% of Sales = 1,250 + 1,250 = 2,500
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Variable Costs Sales = 2,500 / 0.9 = 2,778 Contribution Margin 1,250 Fixed Costs 750 Operating Income $500 What if we changed the incentive to 10% of sales and wanted to change the price to result in a profit of $500 Contribution Format % of Sales Per Unit Sales - Variable Costs = Contribution Margin Sales $2,778 100.0% $2.78 Sales - 1,250 - (10% of Sales) = 1,250 (Sales - 10% of Sales) - 1,250 = 1,250 Variable Costs 1,528 55.0% $1.53 90% of Sales = 1,250 + 1,250 = 2,500 Sales = 2,500 / 0.9 = 2,778 Contribution Margin 1,250 45.0% $1.25 Fixed Costs 750 Operating Income $500 What if we changed the incentive to 10% of sales and wanted to change the price to result in a profit of $500 Contribution Format % of Sales Per Unit Sales Variable Costs Contribution Margin Fixed Costs Operating Income...
View Full Document

This note was uploaded on 10/20/2011 for the course ACC 222 taught by Professor Brewer during the Spring '08 term at Miami University.

Page1 / 6

Ch_4a_Hot_Dog_Operation_-_B - Variable Costs Sales = 2,500...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online