The management of Lambda Corporation has received the following forecast for the next year. Sales revenue $600,000 Fixed costs $275,000 Variable costs 270,000 Total costs 545,000 Net income $ 55,000 Capacity is a sales volume of $800,000. a. Compute i. the contribution margin ii.the contribution rate. b. Compute the break-even point i. in dollars; ii. as a percent of capacity. c. Determine the break-even volume in dollars if fixed costs are increased by $40,000, while variable costs are held to 40% of sales.
The management of Lambda Corporation has received the following forecast for the next year. Sales revenue $600,000 Fixed costs $275,000 Variable costs 270,000 Total costs 545,000 Net income $ 55,000 Capacity is a sales volume of $800,000. a. Compute i. the contribution margin ii.the contribution rate. b. Compute the break-even point i. in dollars; ii. as a percent of capacity. c. Determine the break-even volume in dollars if fixed costs are increased by $40,000, while variable costs are held to 40% of sales.
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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3. The management of Lambda Corporation has received the following
Sales revenue $600,000
Fixed costs $275,000
Variable costs 270,000
Total costs 545,000
Net income $ 55,000
Capacity is a sales volume of $800,000.
a. Compute
i. the contribution margin
ii.the contribution rate.
b. Compute the break-even point
i. in dollars;
ii. as a percent of capacity.
c. Determine the break-even volume in dollars if fixed costs are increased by $40,000, while variable costs are held to 40% of sales.
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