Example: The Benson Co. manufactures two models of hair dryers, A and B. Budgeted sales data for the coming year is as follows: Model A Model B Units Sales Mix 30,000 50,000 Unit Selling Price $50 $20 Contribution Margin $20 $10 Unit Contribution Ratio 40% 50% Required: 1. Compute the total number of units to be sold at the breakeven point. 2. Compute the number of units of each model to be sold at breakeven. 3. Compute the total sales dollars at breakeven. 4. Compute the sales dollars for each model at breakeven. 5. If sales revenue were to total $3,000,000 during the coming year, how much net income would be earned? Assume that the actual sales mix, fixed costs, and unit contribution margins were the same as budgeted and that the firm has an effective federal income tax rate of 35%.

Example: The Benson Co. manufactures two models of hair dryers, A and B. Budgeted sales data for the coming year is as follows: Model A Model B Units Sales Mix 30,000 50,000 Unit Selling Price $50 $20 Contribution Margin $20 $10 Unit Contribution Ratio 40% 50% Required: 1. Compute the total number of units to be sold at the breakeven point. 2. Compute the number of units of each model to be sold at breakeven. 3. Compute the total sales dollars at breakeven. 4. Compute the sales dollars for each model at breakeven. 5. If sales revenue were to total $3,000,000 during the coming year, how much net income would be earned? Assume that the actual sales mix, fixed costs, and unit contribution margins were the same as budgeted and that the firm has an effective federal income tax rate of 35%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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