Account chpt 5

Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?

200 (price per unit - variable expense) 500-300=200

Taylor Company has current sales of 1,000 units at a selling price of $190 per unit, variable cost per unit of $76 and fixed expense of 96,000. The company believes sales will increase by 300 unit, if the company introduce sales commission as an incentive for the sales staff. The changes will decrease the selling price to $175 per unit, increase variable cost per unit to $100 and decrease fixed expense by 20,000. What is the net operating income after the changes?

21,500 new CM per unit=(change selling price- change variable cost new CM= CM*(unit +new unit) new fixed cost= (fixed expense-change fixed expense) New NOI= CM-Fix cost (175-100)=75 75*1,300=97500 96,000-20,000=76,000 97,500-76,000=21,500

What are the sales dollars required to attain the target profit of 120,000

400,000 (fixed cost+target profit)/CMR (40,000+120,000)/0.40

What is Ralph Corporation's margin of safety in dollars?

1,000,000 (sales-variable expenses)=CM (fixed cost/CM)=Break even (total sales-breakeven sale)= Margin of safety (200-150)=50 1,000,000/50=20,000 25,000-20,000=5000 5,000*500=1,000,000

Frank Corporation has a single product. Its selling price is $80 and the variable costs are $30. The company's fixed expenses are $5,000. What is the company's break-even point in unit sales?

100 per unit (price per unit - variable cost per unit)= CM per unit (fixed expense/CM per unit)= break even point (80-30)=50/5,000=100

Atlas Corporation sells 100 bicycles a month. The contribution margin per bicycle is 200. The monthly fixed expense is 8,000. What is the profit from the sale of 100 bicycles

12,000 (item sold*CM)-fixed expense 100*200=20,000 20,000-8,000= 12,000

What is Ralph Corporations margin of safety in percentages

20% sales-variable expenses)=CM (fixed cost/CM)=Break even (total sales-breakeven sale)= Margin of safety (margin of safety/Total sales) (200-150)=50 1,000,000/50=20,000 25,000-20,000=5000 5,000*500=1,000,000 5,000/25,000=20%

Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company's fixed expenses are $10,000. What is the company's break-even point in sales dollars?

25,000 (selling price- variable cost)= Contribution (contribution/ sales *100)=CM ratio (fixed expense/ CM ratio)= Break even 100-60=40*/100=40% 10,000/40%=25,000

What are the unit sales required to attain a target profit of 120,000

4,000 units (target profit + fixed expense)/ Unit CM (120,000+40,000)/40=4,000

Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's variable cost ratio?

40% (variable/price per unit) (20/50)=40%

if sales increase by 50,000, what will be the net operating income for the company

55,000 (variable expense)*sale+(increase or decrease)=contribution - fixed cost (50,000/100,000)*150,000=75,000-20,000=55,000

Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's contribution margin ratio?

60% (price per unit- variable)/price per unit (50-20)/50=60%

Cubie Corporation has provided the following data concerning its only product: Selling price$ 111per unit Current sales 9,300 units Break-even sales 7,998 units What is the margin of safety in dollars?

Margin safety in dollars= total sales - break even sales (9,300*111)-(7,998*111)= 144,522

Nocum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 120,000 Variable expenses 90,000 Contribution margin 30,000 Fixed expenses 21,000 Net operating income $ 9,000 If sales volumes decline to 2,900 units, the net operating income would be closest to:

Sell per unit = (120,000/3,000)= 40 Var per unit = (90,000/3,000) = 30 unit= 40-30=10 Contribution Margin= (10*2,900)= 29,000 Net income= fix expense(21,000-29,000)=8,000

Data concerning Bedwell Enterprises Corporation's single product appear below: Selling price per unit$ 165.00 Variable expense per unit$ 92.00 Fixed expense per month$ 431,040 The unit sales to attain the company's monthly target profit of $20,000 is closest to: (Do not round intermediate calculations.)

Unit CM= Sell price per unit - Variable expense per unit 165-92=73 Unit sale of target profit= (target profit + fix expe)/ Unit CM =20,000+431,040/73=6,179

Within the relevant range, variable costs can be expected to:

Within the relevant range, variable costs can be expected to:

Creswell Corporation's fixed monthly expenses are $27,500 and its contribution margin ratio is 61%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $87,000?

profit= (CMR * sales) - Fixed expense (0.61*87,000)-27,500= 25,570

contribution margin equals

sales minus variable costs

Evan's Electronics Boutique sells a digital camera. The following information was reported for the digital camera last month: Sales$ 17,600 Variable expenses 9,680 Contribution margin 7,920 Fixed expenses3,600 Net operating income$ 4,320 Evan's margin of safety in dollars and percentage are closest to:

Contribution margin = Sales − Variable expenses= $17,600 − $9,680 = $7,920 Contribution margin ratio = Contribution margin ÷ Sales= $7,920 ÷ $17,600 = 0.45 Dollar sales to break even = Fixed expenses ÷ Contribution margin ratio= $3,600 ÷ 0.45 = $8,000 Margin of safety in dollars = Total budgeted (or actual) sales − Break-even sales= $17,600 − $8,000 = $9,600 Margin of safety percentage = Margin of safety in dollars ÷ Total budgeted (or actual) sales= $9,600 ÷ $17,600 = 55%

Contribution margin is:

Sales less variable production, variable selling, and variable administrative expenses.

Taylor Company has current sales of 1,000 units, which generated sales revenue of 190,000, variable cost or 76,000, and fixed expenses of 96,000. The company believe sales will increase by 300 units, if advertising increase by 20,000. what is the change in net operating income after the change

increase of 14,200 (sales/ sales per unit)= CM per unit (CM per unit * increase unit) - fix cost (190,000-76,000)/1,000=144 (144*300)-20,000=14,200