Questions -
Q1. Travelers aid most recent income statement follows:
Total Per unit
Sales (3000 units) $90,000 $30.00
Variables expenses $54,000 $18.00
Contribution margin $36,000 $12.00
Fixed expenses $22,000
Net operating income $14,000
Prepare a new contribution format income statement under the following condition:
The sales volume increases by 150 units. (New sales are 3,150 units)
Q2. Housewares Inc. distributes a single product, food processors whose selling price is $200.00 and whose variable cost is $140.00 per unit. The company's monthly fixed expense is $18,000.
a. What is the company's breakeven point in unit sales using the equation method? Show calculations.
b. What is the company's breakeven point in sales dollars using the contribution margin with the CM ratio? Show calculations.
Q3. Strong Wood Company is a distributor of patio furniture. Data concerning the next month's budget appear below:
Selling price $ 290 per unit
Variable expenses $ 174 per unit
Fixed expenses $ 158,000 per month
Unit sales 1,500 units per month
a. What is the company's margin of safety? Show calculations.
b. What is the company's margin of safety as a percentage of sales? Show calculations.