Answered: The Advent Corporation also…

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter20: Variable Costing For Management Analysis

Section: Chapter Questions

Problem 20.4CP

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Question 3 Part II
The Advent Corporation also manufactures chairs and tables at one of their divisions. The following is
data for its chair manufacturing department for the month of February.
Actual Sales 4,500 Chairs
Selling Price $60.00 per chair
Variable Costs $15.00 per chair
Fixed Costs $72,000

Required:
a. Calculate the Contribution Margin per chair.
b. Compute the Contribution Margin Ratio.
c. Determine the break-even point in revenue dollars.
d. Calculate the Margin of Safety in revenue dollars.
e. If the company wishes to increase its total dollar contribution margin by 50% in March, by how much
will it have to increase sales, in units, if all factors remain the same?

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