Prepare a contribution margin format income statement; answer what-if questions Shown here is an income statement in the traditional format for a firm with a sales volume of 10,000 units. Cost formulas also are shown: ... $50,000 Revenues.... Cost of goods sold ($9,000 ? $2.60/unit). Gross pro? t...... Operating expenses: Selling ($2,300? $.1 5/unit)....... Administration ($4,700 ? $.25/unit). Operating income... ...35,000 $15,000 3,800 7,200 $4,000 Required: a. Prepare an income statement in the contribution margin format. b. Calculate the contribution margin per unit and the contribution margin ratio.
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- West Island distributes a single product. The companys sales and expenses for the month of June are shown. Using the information presented, answer these questions: A. What is the break-even point in units sold and dollar sales? B. What is the total contribution margin at the break-even point? C. If West Island wants to earn a profit of $21,000, how many units would they have to sell? D. Prepare a contribution margin income statement that reflects sales necessary to achieve the target profit.Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products-sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Total Units 1,000 500 500 2,000 Percentage of total sales Sales Variable expenses Contribution margin Contribution margin per unit Fixed expenses Operating income Break-even point in unit sales: Percentage sex 25% 25% 100% Break-even point in sales dollars: Total Fixed expenses. Weighted-average CM per unit Sinks 48% Product Mirrors 20% $264,000 100.00% $110,000 100.00% $176,000 100.00% $550,000 100.00% 80,000 30.30% 72,000 65.45% 82,000 46.59% 219,300 39.87% 53.41% 60.13% $184,000 $ 94,000 330,700 69.70% 38,000 34.55% S 76.00 $ 184.00 $ 188.00 Fixed expenses Overall CM ratio $293,300 $158.00 Vanities 32% $293,300 0.60 1,856.33 units Total 100% 293,300 $ 37,400 = $487,798.61 *($184.00 0.50) + ($76.00 x…APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company's product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a per-unit basis.…
- Matamad Inc. Provides you with the following data on its operation for analysis:Unit selling priceP40Variable costs and expenses per unit.P30Fixed cost and expenses per annum.P48,000REQUIRED:a. Contribution margin per unitb. Contribution margin percentagec. BEP sales volume (units)d. BEP peso salese. Peso sales with desired income of P9,000f. Peso sales with desired income P13,000 after 32% income taxGiven the following information, find number of customers: Profit, $33,603; sales price per unit, $17.00; fixed costs, $97,197; contribution rate, .6Profit Functions A company has a fixed cost of $26,000 and a production cost of $5 for each unit it manufactures. A unit sells for $10. Find the following functions (in dollars). (a) What is the cost function? C(x) = (b) What is the revenue function? R(x) = (c) What is the profit function? P(x) = (d) Compute the profit (loss), in dollars, corresponding to the following production levels. P(5,500) =$ P(8,800) =$ P(12,100) =$
- Prepare a contribution margin format income statement; answer what-ifquestions Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units. Cost formulas also are shown:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000Cost of goods sold ($36,000 1 $5.20/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000Operating expenses:Selling ($9,200 1 $0.30/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200Administration ($18,800 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,800Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,000Required:a. Prepare an income statement in the…The accountant for PNW, LLC has prepared a contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) Variable expenses Contribution margin Fixed expenses $540,000 405,000 135,000 130,500 Net operating income $ 4,500 Assuming that the information provided is within the relevant range, the contribution margin ratio is closest to:Asha Inc. and Samir Inc. have the following operating data: Sales Variable costs Contribution margin Fixed costs Asha Inc. $2,500,000 (1,500,000) $1,000,000 (800,000) $200,000 Asha Inc. Samir Inc. Samir Inc. $4,000,000 (2,500,000) $1,500,000 (900,000) $600,000 Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 150 75 Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 30%? Dollars Percentage 30 % 30 % c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher operating leverage means that its fixed costs are a smaller Inc.'s. percentage of contribution margin than are Samir
- Break-Even Sales and Cost-Volume-Profit Chart Last year Hever Inc. had sales of $1,000,000, based on a unit selling price of $400. The variable cost per unit was $320, and fixed costs were $88,000. The maximum sales within Hever Inc.'s relevant range are 3,200 units. Hever Inc. is considering a proposal to spend an additional $36,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. Required: 1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. In your computations, do not round the contribution margin percentage. Break-even sales (dollars) Break-even sales (units) 2. Using the cost-volume-profit chart prepared in part (1), determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. In your computations, do not round the contribution margin percentage. Income from operations Maximum income…Prepare a contribution margin format income statement; answer what-ifquestions Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $105,000Cost of goods sold ($8,000 1 $3.60/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,000Operating expenses:Selling ($1,500 1 $0.80/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500Administration ($4,000 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,000Required:a. Prepare an income statement in the contribution margin format.b. Calculate the…be determined using the above information Mazoon Company has information on its revenue and costs is as follows: Selling price per unit $125; Variable costs per unit includes: Direct material $15, Direct manufacturing labor $10, Manufacturing overhead $5, and Selling costs $10; Annual fixed costs $78,000. What is the contribution margin percentage? O a. None of the given answers O b. 68% O c. 70% d. 32% e. 60% NEXT PAGE AGEVindows but Jail ENG G 4)