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Chapter 4b Solutions to Cornerstone Exerceises

# Chapter 4b Solutions to Cornerstone Exerceises - CHAPTER 4B...

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CHAPTER 4B CORNERSTONE EXERCISES Cornerstone Exercise 4–19 1. Any package with 5 bicycle helmets for every 1 motorcycle helmet is fine. For example, 5:1, or 10:2, or 30:6. Throughout the rest of this exercise, we will use 5:1. Unit Unit Package Unit Variable Contribution Sales Contribution Product Price Cost Margin Mix Margin Bicycle helmet \$ 70 \$ 49 \$21 5 \$105 Motorcycle helmet 220 143 77 1 77 Package total \$182 2. Break-even packages = margin on contributi Package cost Fixed = \$182 \$54,600 = 300 packages Break-even bicycle helmets = Number of packages × Sales mix amount = 300 × 5 = 1,500 Break-even motorcycle helmets = Number of packages × Sales mix amount = 300 × 1 = 300 3. Head-First Company Contribution Margin Income Statement At Break-Even Total Sales [(\$70 × 1,500) + (\$220 × 300)] .......................................... \$171,000 Total variable expense [(\$49 × 1,500) + (\$143 × 300)] .............. 116,400 Total contribution margin ......................................................... \$ 54,600 Total fixed expense ................................................................... 54,600 Operating income ...................................................................... \$ 0

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Cornerstone Exercise 4–20 1. Contribution margin ratio = (\$570,000 \$388,000) \$570,000 - = 0.3193 Break-even sales dollars = ratio margin on Contributi
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Chapter 4b Solutions to Cornerstone Exerceises - CHAPTER 4B...

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