Austin Co. plans to manufacture and sell electronic products. The projected data for producing its products for a typical year is as follows: Budgeted sales (in units) 1,200 Selling price per unit Variable costs per unit Total fixed costs $100 $80 $20,000 Income tax rate 20% Desired profits after tax $16,000 Required) Please answer the following questions and show all your works (formula and numbers) to get full credits. a. What are the contribution margin per unit and CM ratio? b. How many units (per year) would it have to produce in order to break even? c. To earn the desire after-tax profits, how many units (per year) would it have to sell/produce? d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define what is meant by the MOS. e. Calculate the degree of operating leverage if the budgets amount (per year) are sold. Define what is meant by the DOL.
Austin Co. plans to manufacture and sell electronic products. The projected data for producing its products for a typical year is as follows: Budgeted sales (in units) 1,200 Selling price per unit Variable costs per unit Total fixed costs $100 $80 $20,000 Income tax rate 20% Desired profits after tax $16,000 Required) Please answer the following questions and show all your works (formula and numbers) to get full credits. a. What are the contribution margin per unit and CM ratio? b. How many units (per year) would it have to produce in order to break even? c. To earn the desire after-tax profits, how many units (per year) would it have to sell/produce? d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define what is meant by the MOS. e. Calculate the degree of operating leverage if the budgets amount (per year) are sold. Define what is meant by the DOL.
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...
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