Question

Last year, Twins Company reported $750,000 in sales (25,000 units) and a net operating income of...

Last year, Twins Company reported $750,000 in sales (25,000 units) and a net operating income of $25,000. At the break-even point, the company's total contribution margin equals $500,000. Based on this information, the company's:

a.

contribution margin ratio is 40%.

b.

break-even point is 24,000 units.

c.

variable expense per unit is $9.

d.

variable expenses are 60% of sales.

Homework Answers

Answer #1

The Correct Answer is “C. The Company’s Variable Expense per unit is $9”

  

Contribution Margin Ratio = [(Net Operating Income + Contribution Margin at Break Even Point) / Sales] x 100

= [($25,000 + 500,000) / $750,000] x 100

= 70%

Variable Expense Ratio = 100% - Contribution Margin Ratio

= 100% - 70%

= 30%

Selling Price per unit = Total Sales / Number of units sold

= $750,000 / 25,000 Units

= $30 per unit

Variable Expense per unit = Selling price per unit x Variable Expense Ratio

= $30 x 30%

= $9 per unit

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company sells 25,000 units for $60 each. Variable expenses per unit are $35. Fixed expenses...
A company sells 25,000 units for $60 each. Variable expenses per unit are $35. Fixed expenses for the company are $220,000. Provide the following information. Enter your answers in the same order in which these appear. Contribution margin per unit Contribution margin ratio Break-even in unit sales Break-even in dollar sales Margin of safety in dollars Margin of safety percentage Degree of operating leverage
(TCO C) Magnolia Company's income statement for the most recent year appears below. Sales (45,000 units)...
(TCO C) Magnolia Company's income statement for the most recent year appears below. Sales (45,000 units) $1,350,000 Less: variable expenses 750,000 Contribution margin 600,000 Less: fixed expenses 375,000 Net operating income $225,000 Required: Calculate the unit contribution margin. Calculate the the break-even point in dollars. If the company desires a net operating income of $290,000, how many units must it sell?
Drake Company's income statement for the most recent year appears below. Sales (45,000 units) $1,350,000 Less:...
Drake Company's income statement for the most recent year appears below. Sales (45,000 units) $1,350,000 Less: variable expenses 750,000 Contribution margin 600,000 Less: fixed expenses 375,000 Net operating income $225,000 REQUIRED: a. Calculate the unit contribution margin in dollars. b. Calculate the break-even point in dollars. c. If the company desires a net operating income of $290,000, how many units must it sell?
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 316,000 $ 20 Variable expenses 221,200 14 Contribution margin 94,800 $ 6 Fixed expenses 78,000 Net operating income $ 16,800 Required: 1. What is the monthly break-even point in unit sales and in dollar sales?            Break Even Point in unit sales            Break Even Point in dollar sales 2. Without resorting to computations, what is the total contribution margin at...
XYZ company's sales $800000, unit variable cost $8, fixed expense $100000, and number of units sold...
XYZ company's sales $800000, unit variable cost $8, fixed expense $100000, and number of units sold equals 80000. Requirements (1-10): Net operating income. 2. Contribution margin percentage. 3. Unit fixed cost. 4. Break-even point in unit sold. 5. Break-even point in total sales dollar. 6. Unit sales to attain the target profit 76000. 7. Margin of safety (Units). 8. Margin of safety (%). 9. Degree of operating leverage. 10.In original information, if the number of quantity sold increase by 10%,...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 302,000 $ 20 Variable expenses 211,400 14 Contribution margin 90,600 $ 6 Fixed expenses 73,200 Net operating income $ 17,400 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each...
Break-Even Point in Sales Dollars Amount Descriptions Operating income Calculate the sales revenue that Head-First must...
Break-Even Point in Sales Dollars Amount Descriptions Operating income Calculate the sales revenue that Head-First must make to break even by using the break-even point in sales equation. Operating loss Sales Total contribution margin Total fixed cost Total variable cost Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 604,000 $ 40 Variable expenses 422,800 28 Contribution margin 181,200 $ 12 Fixed expenses 154,800 Net operating income $ 26,400 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each...
MENTO COMPANY distributes a single product. The company's sales and expenses for last month follow: The...
MENTO COMPANY distributes a single product. The company's sales and expenses for last month follow: The company sales 15,000 units last month. Sales ....................... (15,000 units) ....................$ $450,000    Variable expenses .............................................    180,000 Contribution margin ............................................. $ 270,000 Fixed expenses ................................................... 216,000 Net operating income ........................................... . $ 54,000 REQUIRED 1. What is the monthly BREAK EVEN POINT in units and dollar sales? 2. What is the Contribution Margin at the Break Even Point ? 3. How many units...
1. A company's contribution margin is $90 per unit at a sales level of 5,400 units....
1. A company's contribution margin is $90 per unit at a sales level of 5,400 units. The company's operating income is $37,000. The company's operating leverage is closest to _____. (Round-off the answer to one decimal place.) a.14.9 b.13.1 c.12.4 d.14.0 2. The break-even point is: a.the same for every company in the same industry. b.the point where a company's profits are maximized. c.the point where total revenue equals total cost. d.the point where sales revenues equal variable costs. 3....