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ch_4_hw-assignment[1]

# ch_4_hw-assignment[1] - Jonathan Maloy Accounting...

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Jonathan Maloy Accounting Assignment Question 1 Tanner Company's most recent contribution format income statement is presented below: Note: Contribution margin =.40 Variable expenses = 60% of sales There was no beginning or ending inventories. Required: a. Compute the company's break-even point in sales revenue. (36,000+0)/ (30,000) =1.2 Break even in units 1.2*75,000= 90,000 Break-even point in sales revenue b. Compute the total variable expenses at the break-even point. 1.2X45,000=54,000 c. What are the sales revenues needed to earn a target profit of \$9,000? 36000+9000/30000=1.5 1.5X75,000=112,500 d. The sales manager is convinced that a \$6,000 increase in the advertising budget would increase total sales by \$25,000. Would you advise the increased advertising outlay? 75,000+25,000=100,000 45,000/75,000=.6 Sales=\$100,000 VC= \$60,000 CM-\$40,000 AE =\$6,000 GM =\$34,000 FE=\$36,000 N.O.I.=\$-2,000 He is correct. Variable expenses are 60% of the sales. So 6,000 isn’t much because only 24% of cost increases of sales of 25,000 so it would be worth a shot.

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Question 2 Zins Corporation produces and sells a single product. The company's contribution format income
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