Solution Brief Exercise 145 Contribution margin ratio = 100% - 37.5% = 62.5%.625x – $46,875 = 0X = $75,000 of sales dollars5-26
Cost–Volume–Profit Brief Exercise 146Deighan Company had the following income statement:Sales revenue (800 units)$80,000Cost of goods sold -fixed 20,000Cost of goods sold -variable 18,500Operating expenses - fixed12,000Operating expenses - variable13,500Net income $16,000How much is Deighan's contribution margin?Solution Brief Exercise 146Sales – variable costs = contribution margin$80,000 - $18,500 - $13,500 = $48,000Brief Exercise 147The following monthly data are available for Marketplace, Inc. which produces only one product which it sells for $18 each. Its unit variable costs are $8, and its total fixed expenses are, $15,000. Actual sales for the month of May totaled, 2,000 units. How much is the margin of safety for the company for May? Solution Brief Exercise 147BEP in units: $18 x - $8 x – $15,000 = 0BEP in units = 1,500 unitsUnits at current sales level = 2,000Margin of safety = (2,000 - 1,500) x $18 = $9,000Sales can drop by $9,000 before the company incurs a lossBrief Exercise 148At break even point a company sells 1,200 widgets. Its selling price is $6 per widget, variable cost is $2 per widget, and its fixed cost is $4 per widget. If it sells 100 additional widgets, how much is incremental profit? Solution Brief Exercise 148$6(1,200) - $2(1,200) – x = 0Total fixed costs = $4,800Incremental profit = 100 x ($6 - $2) = $4005-27
Test Bankfor Managerial Accounting, Third EditionBrief Exercise 149Sam Company makes 2 products, footballs and baseballs. Additional information follows:FootballsBaseballsUnits 4,0002,500Sales$60,000 $25,000 Variable costs36,0007,000Fixed costs9,0009,000Net income$15,000 $9,000 Profit per unit$3.75 $3.60 If Sam has unlimited demand for both products, which product should Sam tell his sales people to emphasize? Solution Brief Exercise 149Contribution margin per unit:Footballs = [$60,000 - $36,000]/4,000 = $6Baseballs = [$25,000 - $7,000]/2,500 = $7.20Sam should tell sales people to sell more baseballs due to the higher contribution margin per unit.Brief Exercise 150Snara Company accumulates the following data concerning a mixed cost, using miles as the activity level.Miles DrivenTotal CostMiles DrivenTotal CostJanuary10,000$15,000March9,000$12,500February8,000$14,500April7,500$13,000Compute the variable and fixed cost elements using the high-low method.Solution Brief Exercise 150$15,000 − $13,000=$0.80 = variable costper mile10,000 − 7,500$0.80 (10,000) + FC = $15,000 Fixed cost = $7,000Or$0.80 (7,500) + FC = $13,000 Fixed cost = $7,0005-28
Cost–Volume–Profit Brief Exercise 151Determine the missing amounts.Unit Selling PriceUnit Variable CostsContribution Margin per UnitContribution Margin Ratio1.$300$200A.B.2.$600C.$100D.3.E.F.$40040%Solution Brief Exercise 151A.$300 - $200 = $100B.$100/$300 = 33.3%C.$600 – $100 = $500D.$100/$600 = 16.7%E.$400/40% = $1,000F.If 40% = CM ratio, then 60% = variable cost percentage; $1,000 x 60% = $600Or $1,000 - $00 = $600Brief Exercise 152Kettle Goods Company has a unit selling price of $500, variable cost per unit $300, and fixed costs of $170,000. Compute the break-even point in units and in sales dollars.
- Spring '14