4. Ribb Corporation produces and sells a single product. Data concerning that product appear below: Selling price. Variable expenses. Contribution margin........... Per Unit Percent of Sales $190 100% 57 $133 30% 70% Fixed expenses are $913,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change? A. Decrease of $3,200 B. Increase of $50,800 C. Decrease of $50,800 D. Increase of $3,200

4. Ribb Corporation produces and sells a single product. Data concerning that product appear below: Selling price. Variable expenses. Contribution margin........... Per Unit Percent of Sales $190 100% 57 $133 30% 70% Fixed expenses are $913,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change? A. Decrease of $3,200 B. Increase of $50,800 C. Decrease of $50,800 D. Increase of $3,200

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 47E: Klamath Company produces a single product. The projected income statement for the coming year is as...

See similar textbooks

Similar questions

Klamath Company produces a single product. The projected income statement for the coming year is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. 2. Suppose 10,000 units are sold above break-even. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four decimal places, and round the sales revenue to the nearest dollar.) Suppose that revenues are 200,000 more than expected for the coming year. What would the total operating income be?
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Abilene Industries manufactures and sells three products (XX, W, and ZZ). The sales price and unit variable cost for the three products are as follows: Their sales mix is reflected as a ratio of 4:2:1. Annual fixed costs shared by the three products are $345.000 per year. What are total variable costs for Abilene with their current product mix? Calculate the number of units of each product that will need to be sold in order for Abilene to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are $15,250. Delta Co.s tax rate is 36% and the company wants to earn $44,000 after taxes. What would be Deltas desired pre-tax income? What would be break-even point in units to reach the income goal of $44,000 after taxes? What would be break-even point in sales dollars to reach the income goal of $44000 after taxes? Create a contribution margin income statement to show that the break-even point calculated in B, generates the desired after-tax income.
4) Data concerning Shanta Corporation's single product appear below: Selling price.. Variable expenses .. Contribution margin.. Per Unit $220 66 $ 154 Percent of Sales 100% 30% 70% Fixed expenses are $1,024,000 per month. The company is currently selling 8,000 units per month. Required: Management is considering using a new component that would decrease the unit variable cost by $6. But for the new component the marketing manager predicts that monthly sales would decrease by 300 units. That also decrease the monthly advertising cost of $22,000. Should the proposal be accepted? Show your work!
(Please answer question 3) Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 2. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V 3. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management…
2. Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The company’s monthly fixed expenses are $22,500. The following names are to be considered when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss What is the company’s break-even point in units? . Use commas as needed (i.e. 1,234). What is the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Using the names listed above, construct a contribution margin income statement for the month of September when they will sell 900 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Maple Enterprises Contribution Margin Income Statement For the Month of September How many units will Maple need to sell in…
B. C. D&R Corporation has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company's product line. The new item will have $9.52 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $26,880 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 16,000 units of the new product could be sold at a price of $15.50 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Complete this question by entering your answers in the tabs below. Required A Required B Management is considering adding a new product to the company's product line. The new item will have $9.52 of…
1. Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The company’s monthly fixed expenses are $180,000. The following names are to be considered when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss What is the company’s break-even point in units? Use commas as needed (i.e. 1,234). What is the company’s break-even point in dollars? Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Using the names listed above, construct a contribution margin income statement for the month of October when they will sell 10,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Cadre, Inc. Contribution Margin Income Statement For the Month of October How many units will Cadre need to sell in order to…
7. Answer the following questions, considering each situation independently. You might not be able to answer the questions in the order they are asked.1. A company earned $200,000 selling 100,000 units at $8 per unit. Its fixed costs are $400,000.A. What are variable cost per unit?B. What is total contribution margin?C. What would income be if sales increased by 5,000 units? *
Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would…