A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for $450 and has per-unit variable costs of $200 associated with its production. The company has fixed expenses of $40,000 per month. In May, the company sold 225 of the Bomber model bikes.
A. Calculate the contribution margin per unit for the Bomber.
B. Calculate the contribution margin ratio of the Bomber.
C. Prepare a contribution margin income statement for the month of May.
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
Principles of Accounting Volume 2
Additional Business Textbook Solutions
Financial Accounting (11th Edition)
Horngren's Accounting (12th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Financial Accounting, Student Value Edition (4th Edition)
Principles of Accounting Volume 1
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
- A company manufactures and sells blades that are used in riding lawnmowers. The 18-inch blade sells for $15 and has per-unit variable costs of $4 associated with its production. The company has fixed expenses of $85,000 per month. In January, the company sold 12,000 of the 18-inch blades. A. Calculate the contribution margin per unit for the 18-inch blade. B. Calculate the contribution margin ratio of the 18-inch blade. C. Prepare a contribution margin income statement for the month of January.arrow_forwardAcme Inc. manufactures and sells widgets. Acme Inc. sells widgets for $15 each. Acme Inc. uses 3 gizmos for each widget. Gizmos cost $2 each. In December, Acme sold 300 widgets. Acme also pays rent of $500 per month. please show work. A.) What is Acme Inc.'s contribution margin per unit? B.) What is Acme Inc.'s contirbution margin ratio? C.) Assuming the about information is all revenue and expenses for scme, what is December's net income? D.) Determine the fixed cost give the following information: Lowest level of activity- 200 units at a total cost of $600 Highest level of activity- 800 units at a total cost of $1,800 Fixed cost =arrow_forwardNora Company produces brake pads for Callahan Auto Parts, whcih it sells for $40 each. each brake pad costs $10 of variable costs to make. during december, 6,000 brake pads were sold. fixed costs were $5,000. what is the contribution margin ratio? The picture below shows the answer choices.. please helparrow_forward
- JPAK manufactures and sells mountain bikes. It operates eight hours a day, five days a week. Using this information,classify each of the following costs as fixed or variable with respect to the number of bikes made. Taxes on propertyarrow_forwardSimeon, Inc. markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears on the following page: 1. Compute the overall contribution margin (CM) ratio for the company. 2. Compute the overall break-even point for the company in sales dollars. 3. Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.arrow_forwardMarwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. Thepianos cost, on the average, $2,450 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianosto its customers at an average price of $3,125 each. The selling and administrative costs that the companyincurs in a typical month are presented below:Costs Cost FormulaSelling:Advertising ................................................ $700 per monthSales salaries and commissions .............. $950 per month, plus 8% of salesDelivery of pianos to customers ............... $30 per piano soldUtilities ...................................................... $350 per monthDepreciation of sales facilities .................. $800 per monthAdministrative:Executive salaries .................................... $2,500 per monthInsurance .................................................. $400 per monthClerical ..................................................... $1,000 per month, plus…arrow_forward
- Company A sells premium water bottles. The fixed costs is 29,709. The variable cost associated with producing one water bottle is $13 per unit. The water bottle is sold at price of $39. If the company set a goal of making $11,083 profit next month, how many bottles does the company need to sell?arrow_forwardRussell Preston delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Russell has determined that if he drives 3,480 miles in a month, his average operating cost is $0.55 per mile. If he drives 4,640 miles in a month, his average operating cost is $0.50 per mile. Russell has used the high-low method to determine that his monthly cost equation is total cost = $696 + $0.35 per mile. Required: 1. Determine how many miles Russell needs to drive to break even. 2. Assume Russell drove 2,040 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month. 3. Determine how many miles Russell must drive to earn $1,000 in profit. 4. a. Prepare a contribution margin income statement assuming Russell drove 2,040 miles last month. b. Use the information provided in Req 4a to calculate Russell's degree of operating leverage. Complete this question by entering your answers in the tabs below. Req 1 Req 2…arrow_forwardSummer company manufactures beach chairs. $ 4.00 of direct materials are needed for each chair. Labor is $ 15 an hour. The company manufactures 3 chairs per hour. Indirect costs are $ 9.00 per hour. Commissions to sellers are $ 2.00 per unit sold. The cost of a chair will be:arrow_forward
- Russell Preston delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Russell has determined that if he drives 3,270 miles in a month, his average operating cost is $0.55 per mile. If he drives 4,360 miles in a month, his average operating cost is $0.50 per mile. Russell has used the high-low method to determine that his monthly cost equation is total cost = $654 + $0.35 per mile. Required: Determine how many miles Russell needs to drive to break even. Assume Russell drove 1,935 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month. Determine how many miles Russell must drive to earn $1,000 in profit. Prepare a contribution margin income statement assuming Russell drove 1,935 miles last month. Use the information provided in Req 4a to calculate Russell’s degree of operating leverage.arrow_forwardGoSnow sells snowboards. Each snowboard requires direct materials of $110, direct labor of $35, and variable overhead of $45. The company expects fixed overhead costs of $265,000 and fixed selling and administrative costs of $211,000 for the next year. The company has a target profit of $200,000. It expects to produce and sell 10,000 snowboards in the next year. Compute the selling price using the variable cost method.arrow_forwardJoyce Murphy runs a courier service in downtown Seattle. She charges clients $0.62 per mile driven. Joyce has determined that if she drives 2,450 miles in a month, her total operating cost is $725. If she drives 3,550 miles in a month, her total operating cost is $857. Required: 1. Using the high-low method, determine Joyce's variable and fixed operating cost components. 2. Complete the contribution margin income statement for Joyce's service assuming she drove 1,600 miles last month. (Assume this falls within the relevant range of operations).arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,