AC202 Week 6 Homework Answers

AC202 Week 6 Homework Answers - Problem 22-5A(65 minutes...

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Part 1 Instructor note: Use the equation in Exhibit 22.12 Break-even in dollar sales = Fixed costs / Contribution margin ratio Product T: = $127,500 / 20%* = $637,500 Product O: = $1,504,500 / 87.5%* = $1,719,429 (rounded to the nearest dollar) *To compute contribution margin ratio Sales price per unit Product T ($2,040,000 / 51,000). ........................................ Product O ($2,040,000 / 51,000). ........................................ __T__ $40 __O__ $40 Variable costs per unit Product T ($1,632,000 / 51,000). ........................................ Product O ($255,000 / 51,000). ........................................... $32 $ 5 Contribution margin ratio Product T ($40- $32) / $40). ................................................ Product O ($40- $5) / $40). ................................................. 20.0% 87.5% Part 2 Forecasted contribution margin income statements for each product assuming sales declines to 40,000 units with no change in unit sales price SHOL CO. Forecasted Contribution Margin Income Statement Product T Product O Sales*. .................................................................... $1,600,000 $1,600,000 Variable costs**. .................................................... 1,280,000 200,000 Contribution margin. ............................................. 320,000 1,400,000 Fixed costs. ........................................................... 127,500 1,504,500 Income before taxes. ............................................ 192,500 (104,500) Income taxes (34%). .............................................. 65,450
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This note was uploaded on 11/11/2011 for the course AC 202 taught by Professor Nancyeverett during the Spring '09 term at Park.

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AC202 Week 6 Homework Answers - Problem 22-5A(65 minutes...

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