Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Chapter 6, Problem 9E
Calculating Contribution Margin, Contribution Margin Ratio, Margin of Safety
Last month, Laredo Company sold 450 units for $25 each. During the month, fixed costs were $2,520 and variable costs were $9 per unit.
1. Determine the unit contribution margin and contribution margin ratio.
2. Calculate the break-even point in units and sales dollars.
3. Compute Laredo’s margin of safety in units and as a percentage of sales.
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A company has a linear total cost function and has determined that over the next three months it can produce12,000 units at a total cost of $224; 000. This same manufacturer can produce 18,000 units at a total cost of$296; 000. The selling price per unit is $13.25.i. Determine the revenue, cost and pro t functions using q for number of units.ii. What is the xed cost ?iii. What is the marginal cost ?iv. Find the break-even quantity.v. What is the break-even dollar volume of sale ?vi. What will pro t be if the company shuts down operation?vii. If, because of a strike, the company will be able to produce only 10,000 units, should it shut down for the nextthree months ? why or why not ?
Last month, Laredo Company sold 490 units for $45 each.
During the month, fixed costs were $5,724 and variable
costs were $9 per unit.
Required:
1. Determine the unit contribution margin and contribution
margin ratio.
2. Calculate the break-even point in units and sales
dollars.
3. Compute Laredo's margin of safety in units and as a
percentage of sales.
Last month, Laredo Company sold 510 units for $55 each. During the month, fixed costs were $5,478 and variable costs were $22 per
unit.
Required:
1. Determine the unit contribution margin and contribution margin ratio.
2. Calculate the break-even point in units and sales dollars.
3. Compute Laredo's margin of safety in units and as a percentage of sales.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3
Determine the unit contribution margin and contribution margin ratio.
Unit Contribution Margin
Contribution Margin Ratio
%
Chapter 6 Solutions
Managerial Accounting
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