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Supplementary Question_CVP

# Supplementary Question_CVP - (OL when sales are 6,000...

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Comprehensive Question - Chapter 6 (28 marks) Waldo Company purchases a single product for \$12 and re-sells it for \$50 after incurring variable selling expenses of \$2. Total fixed costs are \$180,000, much of which is spent on advertising. 1)What is the: i) Gross Margin per unit? \$____________. (1) ii) Contribution Margin per unit? _________ (1) iii) Contribution margin %? ________% (1) 1) Prepare a mini-income statement to show the net income/loss if actual sales are 6,000 units? (2) 2) What is the breakeven point in: (3) i) In \$ ii) In Units iii) List 3 changes the company could make to reduce the BE pt. 3) Calculate the following (based on original data) : (3) i) Margin of Safety in sales \$ ii) MS % = iii) What does this MS% tell us?

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5. Calculate the sales required to earn a target net income of \$ 45,000 (3) i) in sales dollars? ii) in units 6. i) Calculate the degree of operating leverage
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Unformatted text preview: (OL) when sales are 6,000 units. (1) OL = ______ = ___________ = iii) If sales increase by 10%, how much will Net Income increase? (3) In % terms? In \$? What is the new NI? 7. Calculate the selling price that will be needed if Waldo Company desires a target income next year of \$50,400 and believes it can sell 6,400 units.Variable and fixed costs would be the same as this year. (3) 8. If the selling price was increased by 10%, Waldo Co. expects sales volume would decrease by 5%, but only if advertising was increased by \$20,000. Required: Prepare a mini-income statement to calculate the revised income statement and indicate whether you think Waldo should pursue this option. ( 4) 9. If Waldo Co. wants to earn a target income of 15% of Sales, what must there sales level in \$? (3)...
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Supplementary Question_CVP - (OL when sales are 6,000...

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