Homework Help is Here – Start Your Trial Now!
Business
Accounting
Telematics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below:   Total Per Unit Percentage of Sales Sales  (25,000 units) $ 2,500,000 $ 100 100% Less variable expenses $ 1,500,000 $ 60   ? % Contribution Margin $ 1,000,000 $ 40  ? % Less Fixed Expenses $ 800,000     Operating Income $ 200,000

Telematics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below:   Total Per Unit Percentage of Sales Sales  (25,000 units) $ 2,500,000 $ 100 100% Less variable expenses $ 1,500,000 $ 60   ? % Contribution Margin $ 1,000,000 $ 40  ? % Less Fixed Expenses $ 800,000     Operating Income $ 200,000

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EA: Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of...
See similar textbooks
icon
Related questions
Question

Telematics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below:

 

Total

Per Unit

Percentage of Sales

Sales  (25,000 units)

$ 2,500,000

$ 100

100%

Less variable expenses

$ 1,500,000

$ 60

  ? %

Contribution Margin

$ 1,000,000

$ 40

 ? %

Less Fixed Expenses

$ 800,000

 

 

Operating Income

$ 200,000

 

 

Management believes operating income can  be further improved and would like you to prepare the following analysis:

Required:

  1. Compute the company’s Contribution Margin ( CM ) ratio and variable expense ratio. 
  2. Compute the company’s break-even point in both units and sales dollars. Use the equation method 
  3. Assume that sales increase by $ 600,000 next year. If cost behaviour patterns remain unchanged, by how much will the company’s operating income increase. Use the Contribution Margin (CM) ratio to determine your answer.
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

Assume that next year, management wants the company to earn a minimum profit of $ 500,000. How many units will have to sold to meet this target profit figure? 

Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Inventory Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
SEE MORE TEXTBOOKS