PROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5–1, LO5–3, LO5–4, LO5–5, LO5–8 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales. $400,000 Variable expenses . 160,000 Contribution margin . 240,000 Fixed expenses. 180,000 Net operating income . $ 60,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales.
PROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5–1, LO5–3, LO5–4, LO5–5, LO5–8 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales. $400,000 Variable expenses . 160,000 Contribution margin . 240,000 Fixed expenses. 180,000 Net operating income . $ 60,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter4: Internal Control And Cash
Section: Chapter Questions
Problem 53E
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#2 5-23 Use the CM ratio to determine the break-even point in dollar sales.
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