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Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 1:
To prepare:
The contribution margin income statement of Gilmore Company for the year ended December 31, 2015.
Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 2:
To compute:
The contribution margin per unit and the contribution margin ratio for Gilmore Company.
Concept introduction:
Contribution Margin Ratio: The ratio that indicates the percentage of sales that is available with the company to cover its fixed expenses and profit refers to contribution margin ratio. The ratio is used to determine the profits from various levels of sales.
Requirement 3:
To interpret:
The results of contribution margin and the contribution margin ratio for Gilmore Company computed in the above requirements.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- Use below information for Questions 1 to 3: Company X manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission at a percent of sales basis. Partial income statement for the year ending Dec 31, 2017, is as follows: Item Amount (TL) Sales 79,000,000 COGS Variable 31,540,000 8,610,000 Fixed Selling and marketing expenses Commissions 13,530,000 10,210,000 Fixed costs The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 8.10% and incur additional fixed costs of TL7,530,000. Q-1) Calculate the degree of operating leverage at sales TL79,000,000 if the company uses sales agents. Q-2) Assume the company employs its own sales staff. Calculate the change in net income in TL if sales decrease by 10%. Q-3) Calculate the estimated sales volume in sales TL that would generate an identical net income for the year ending December 31, 2017, regardless of whether the…arrow_forwardConcord Corporation sells its product for $7100 per unit. Variable costs per unit are: manufacturing, $4200, and selling and administrative, $100. Fixed costs are: $18000 manufacturing overhead, and $24000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 20 units per year in 2018–2020. Sales were 20 units in 2018, 16 units in 2019, and 24 units in 2020. Income under absorption costing for 2019 is $10200. $11200. $5425. $6400.arrow_forwardHow many units must be sold if the company wishes to earn a net profit of R298 920. INFORMATIONSamcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022:1. Total production and sales 2 400 units2. Selling price per table R1 2003. Variable manufacturing costs per table:Direct material R288Direct labour R192Overheads R964. Fixed manufacturing overheads R216 9605. Other costs:Fixed marketing and administrative costs R144 000Sales commission 5%arrow_forward
- Nizwa Co. has the following information available for September 2015. Unit selling price of the l-Phone 5s R.O. 10,800 Unit variable costs R.O. 2,600 Total fixed costs R.O.205,000 Units sold 400 Instructions (a) Prepare a CVP income statement that shows both total and per unit amounts. (b) Find the Contribution Margin Ratioarrow_forwardABC Corporation sells its product for $195.70 per unit. In 2015 the company had total sales in units of 6,000. The total costs were the following: Variable cost of sales $457,800 Fixed cost of sales 100,000 Variable selling & administrative costs 108,500 Fixed selling & administrative costs 512,400 What is the best estimate of the total contribution margin?arrow_forwardBaird company makes a product that sells for $32 per unit. The company pays $14 per unit for the variable costs of the product and incurs annual fixed costs of $147600. Baird expects to sell 21300 units of product. Required Determine Baird margin of safety expressed as a percentage: Margin of safety%arrow_forward
- Norton, Inc. has the following information available for September 2016. Unit selling price of video game consoles $400 Unit variable costs $280 Total fixed costs $48,000 Units sold 500 Instructions: Prepare a contribution margin income statement. What is the per unit contribution margin amount?arrow_forwardHudson Company reports the following contribution margin income statement. Hudson Company reports the following contribution margin income statement.A manufacturer's contribution margin income statement for the yearfollows. Required: Prepare a contribution margin income statement if the number of units sold (a) increases by 200 units and (b) decreases by 200 units. HUDSON COMPANY Contribution Margin Income Statement For Year EndeDecember 31 Required: 1. Assume Hudson has a target income of $162,000. What amount of sales dollars is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent) ?Margin of safetyarrow_forwardThe following information pertain to questions 10 through 13. Hoopie Company sells a single product. The company’s sales and expenses for the recent month follow:Total Per unitSales P600,000 P40Less: Variable expenses 420,000_ 28_Contribution margin 180,000 P12Less: Fixed expenses 150,00__Net operating income P30,00010. What is the monthly break-even point in units sold?a. 12, 000 units b. 12,500 units c. 15,200 units d. 11,000 unitsarrow_forward
- Agta Enterprises manufactures a product that sells for R180 each. The company presently produces and sells 50 000 units per year. Unit variable manufacturing and selling expenses are R90 and R18 respectively. Annual fixed costs are R2 200 000 for manufacturing overheads and R1 040 000 for selling and administrative activities. Determine the sales quantity required in order to achieve the company’s profit objective of R1 800 000.arrow_forwardAmber Company has the following information available for September 2017 Unit selling price of video game consoles $500 Unit variable costs $350 Total fixed costs $72,000 Units sold 720 Instructions (a) Prepare a CVP income statement that shows both total and per unit amounts. (b) Compute Amber breakeven point in units (c) Prepare a CVP income statement for the breakeven point that shows both total and per unit amountsarrow_forwardABC Inc. manufactures a single product. Assume the following data for 2015: VC Per Unit: S&A $14; Production, $38. Total FC: Production, $140,000; S&A, $ 84,000. During the year, 7,000 units were produced and 6,800 units were sold. Under variable costing, the cost of one unit of product would be: O a. $38 O b. $70 O c. $52 O d. $58arrow_forward
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