Chapter2&3

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Unformatted text preview: s, service firm. 1. 2. 3. Revenue per package $9,200 Variable cost per package 6,340 Contribution margin per package $2,860 Breakeven (units) = Fixed costs ÷ Contribution margin per package = $1,287,000 ÷ $2,860 = 450 package tours Contribution margin ratio = Contribution margin per package = $2,860 ÷ $9,200 =31.09% Selling price Units needed to achieve target income = (Fixed costs + target OI) ÷ UCM = ($1,287,000 + $214,500) ÷ $2,860 = 525 packages Revenues to earn $214,500 OI = 525 tour packages $9,200= $4,830,000 or Revenue to achieve target income = (Fixed costs + target OI) ÷ CM ratio = ($1,287,000 + $214,500) ÷ .3109 = $4,829,527 (rounding difference) Fixed costs = $1,287,000 + $40,500 = $1,327,500 Breakeven (units) = Fixed costs Contribution margin per unit Contribution margin per unit = $1,32...
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This note was uploaded on 01/23/2014 for the course TELFER adm3346 taught by Professor Collier during the Winter '12 term at University of Ottawa.

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