Ch_4a_Hot_Dog_Operation_-_B

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

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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

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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
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

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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

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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...
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## 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.

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

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