Concept explainers
(a)
Concept introduction:
Contribution Margin:
The margin of profit which is computed after considering the variable cost only and not the fixed costis known as contribution. In other words, it means the contribution made by selling the product after covering its variable cost to the company.
The contribution margin if the sales price is increased to
(b)
Concept introduction:
Contribution Margin:
The margin of profit which is computed after considering the variable cost only and not the fixed costis known as contribution. In other words, it means the contribution made by selling the product after covering its variable cost to the company.
The contribution margin if both the sales price and variable cost per canoe is increased by
(c)
Concept introduction:
Contribution Margin:
The margin of profit which is computed after considering the variable cost only and not the fixed costis known as contribution. In other words, it means the contribution made by selling the product after covering its variable cost to the company.
The contribution margin if fixed cost is reduced by
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- 1 Lazy Days Inc. (LDI), sells hammocks. Revenue and cost information is given below: Sales Price 3. TL 30 Unit Variable Cost 20 Annual Fixed Operating Expenses 47,500 Required: a) Determine the sales volume in units and TL amount that would be required to attain a TL 12,500 profit. Verify your answer by preparing an income statement using the contribution margin format. b) LDI is considering the implementation of a quality improvement program. The program will require a TL 2.50 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional TL 5,000 for advertising. Assuming that the improvement program will increase sales to a level that is 1,500 units above the amount computed in requirement a, should LDI proceed with plans to improve product quality? Support your answer by preparing a budgeted income statement. c) Determine the new break-even point volume of units and sales in TL as well as the margin of safety…arrow_forwardComplete the table below for contribution margin per unit, total contribution margin, and contribution margin ratio: E (Click the icon to view the table.) Compute the missing information, starting with scenario A, then for scenarios B and C. (Enter the contribution margin ratio to nearest percent, X%.) A Number of units 1,510 units Sale price per unit $ 1,600 Variable costs per unit 1, 120 Calculate: Contribution margin per unit Total contribution margin Contribution margin ratio Data Table A Number of units 1,510 units 14,390 units 2,450 units Sale price per unit 1,600 $ 4.400 5,000 Variable costs per unit 1,120 880 3,750 Calculate: Contribution margin per unit Total contribution margin Contribution margin ratio Print Done Enter any number in the edit fields and then click Check Answer. parts remaining Clear All Final Checkarrow_forwardFill in the blanks for each of the following independent cases. (Click the icon to view the cases.) (For entries with a $0 balance, make sure to enter "0" in the appropriate cell. Round the contribution margin percentage to the nearest whole percent.) Variable Fixed Costs Costs Case Revenues a. $ Data table Case 400 Case a. Case b. Case c. Case d. $ 2,900 $ $ $ Total Costs 1,000 $ 1,800 Variable Fixed Total Revenues Costs Costs Costs 600 $ 400 Operating Income 800 Print $ 200 1,400 $ 200 $ Margin Percentage Contribution $ 1,000 600 $ $ Done % Operating Income 1,400 1,300 Contribution Margin Percentage 50% Xarrow_forward
- Johnson Company manufactures and sells a single product. The company's sales and expenses for last year follow: E(Click the icon to view the information.) X Data Table Read the requirements Requirement 1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the table: Total Per Unit % a. What is the total contribution margin? $ 81,250 $ Sales 25 ? The total contribution margin is $ ? Variable expenses Contribution.margin. 13,000 Fixed expenses $ 19,500 Operating income Done Printarrow_forwardStonebraker Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (9,300 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 306,900 204,600 102,300 77,500 $ 24,800 Required: a. If sales increase to 9,370 units, what would be the estimated increase in net operating income? b. If the variable cost per unit increases by $7, spending on advertising increases by $3,500, and unit sales increase by 20,500 units, what would be the estimated net operating income? c. Estimate how many units must be sold to achieve a target profit of $36,460.arrow_forwardc) Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income. d) Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and sales dollars.arrow_forward
- The company has a desired net income of $53,991 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places eg. 0.25 and round final answers to O decimal places, eg. 2,510.) Sales Dollars Needed Per Service Outlet Oil changes Brake repair $arrow_forwardCompute the contribution margin ratio using the following data: sales, $5,000; total variable cost, $3,000arrow_forwardComplete the table below for contribution margin per unit, total contribution margin, and contribution margin ratio: LOADING... (Click the icon to view the table.) Compute the missing information, starting with scenario A, then for scenarios B and C. (Enter the contribution margin ratio to nearest percent, X%.) A Number of units 2,833 units Sale price per unit $200 Variable costs per unit 80 Calculate: Contribution margin per unit Total contribution margin Contribution margin ratio % Data Table A B C Number of units 2,833 units 3,100 units 5,600 units Sale price per unit $200 $3,000 $125 Variable costs per unit 80 1,500 100 Calculate: Contribution margin per unit Total contribution margin Contribution margin ratioarrow_forward
- -now.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Lo... eBook Show Me How + Contribution Margin Ratio a. Imelda Company budgets sales of $1,010,000, fixed costs of $54,500, and variable costs of $242,400. What is the contribution margin ratio for Imelda Company? (Enter your answer as a whole number.) % : b. If the contribution margin ratio for Peppa Company is 40%, sales were $584,000, and fixed costs were $182,210, what was the income from operations? Oct 26arrow_forwardContribution margin analysis focuses on explaining the differences between planned and actual contribution margins, considering the quantity factor and the unit price factor. After reviewing the data on the Contribution Margin Data panel, complete the following contribution margin analysis. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Saxon, Inc. Contribution Margin Analysis For the Year Ended December 31 1 Planned contribution margin 2 Effect of changes in sales: 3 Sales quantity factor 4 Unit price factor 5 Total effect of changes in sales 6 Effect of changes in variable cost of goods sold: 7 Variable cost quantity factor 8 Unit cost factor 9 Total effect of changes in variable cost of goods sold 10 Effect of changes in selling and administrative expenses: 11 Variable…arrow_forward! Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. Sales (9,900 units at $225 each) Variable costs (9,900 units at $180 each) Contribution margin Fixed costs Income HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 1. Amount of sales 2. Margin of safety Exercise 18-12 (Algo) Target income and margin of safety LO C2 1. Assume Hudson has a target income of $165,000. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) $ 2,227,500 1,782,000 445,500 342,000 $ 103,500 %arrow_forward
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