Question

Question-1

Dave’s has total fixed costs of $45,000. If the company’s contribution margin is 50%, the income tax rate is 28% and the selling price of a box of Jax is $23, how many boxes of Jax would the company need to sell to produce a net income of $19,000?

Question-2

A company needs to sell 15,000 units of its only product in order to break even. Fixed costs are $180,000, and the per unit selling price and variable costs are $24 and $11, respectively. If total sales are $270,000, the company’s margin of safety will be equal to:

solve with explanation and step by step process

i request olease give majority of answers

Answer 1

Answer-1

Selling price 142777.78

Less:- Variable cost 71338.89

Contribution. (50%) 71338.89

Less:- Fixed cost. 45000.00

Profit. 26338.89

Less:- Tax(28%). 7388.89

Net Income. 19000.00

Contribution = profit + fixed cost

= 26339 +45000 =$ 71339

Working note:-

Variable cost = sale - contribution

= 100- 50 = 50%

Profit = net Income/ (1- tax rate)

= 19000/ (1-28%)

= 26389

Answer- 2

Margin of safety = Total sale - BEP

Total sale =$ 270000

BEP = 15000 units × 24 =$360000

Margin of safety =$ 270000- 360000 = ($90000)

Note :- BEP is given wrong in question because BEP is that point where profit would be Zero. But if we calculate profit form BEP unit i.e. 15000 we would get 15000 profilt that is wrong.

But answer is given above as per formula.