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Unformatted text preview: C. Sales price per unit less total variable cost per unit . D. Sales price per unit less unit total cost per unit. E. The same as the contribution margin ratio. 1 The following information describes a product expected to be produced and sold by Hadley Company: Required: (a) Calculate the contribution margin ratio. Contribution margin ratio = Contribution margin/Sales Contribution margin = selling price variable cost = 80-32=$48 Contribution margin ratio = 48/80 = 60% (b) Calculate the break-even point in dollar sales. Breakeven dollar sales = Fixed cost/contribution margin ratio = 630,000/0.6 = $1,050,000 (c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000? Sales necessary = (Fixed cost + desired profit)/contribution margin ratio = (630,000+120,000)/0.6 = $1,250,000 2...
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- Spring '09