Question

The Cole Co.’s selling price per unit is $67 and the variable expense ratio is 66%....

The Cole Co.’s selling price per unit is $67 and the variable expense ratio is 66%. An increase in one dollar of sales will:

increase contribution margin by $0.34.

increase contribution margin by $1.00.

decrease fixed costs by $0.34.

increase fixed costs by $0.66.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Contribution is calculated as Selling price - variable cost.

Variable expense ratio = 66% of selling price

66% of 67 = 44.22

variable cost = $44.22

Contribution margin = 67 - 44.22

= $22.78

If one dollar increases in sales then the contribution margin will be

First calculate variable cost which is 66% of 68 (1 dollar increase) = 44.88

Contribution = 68 - 44.88

= $23.12

Difference between both contribution is

23.12 - 22.78 = 0.34

Thus option A increase contribution margin by 0.34 is correct answer.

Option B is wrong because contribution increased by 0.34 and not by 1.00

Option C is wrong because no fixed cost mentioned

Option D is wrong because no fixed cost mentioned

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Steven Company has fixed costs of $289,518. The unit selling price, variable cost per unit, and...
Steven Company has fixed costs of $289,518. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price per Unit Variable Cost per Unit Contribution Margin per Unit X $848 $318 $530 Y 645 345 300 The sales mix for Products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y. Round answers to the nearest whole number. units...
Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45...
Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45 per unit Fixed expenses $240,000 CVP Relationships Compute the CM ratio Selling price per unit Variable expenses per unit = Contribution margin per unit = CM ratio = Compute the break-even Break-even in unit sales= Break-even in dollar sales= Compute the margin of safety Margin of safety in dollars= Margin of safety percentage=
If the unit selling price is $46 and the variable cost per unit is $34 and...
If the unit selling price is $46 and the variable cost per unit is $34 and the total fixed costs are $44,028, what is the break even point in dollars? Round the contribution margin ratio to at least seven decimal places for your calculation. Round only your final answer to the nearest one dollar and do not type the dollar sign.
1. Assume the following (1) selling price per unit = $30, (2) variable expense per unit...
1. Assume the following (1) selling price per unit = $30, (2) variable expense per unit = $18, and (3) total fixed expenses = $30,300. Given these three assumptions, the unit sales needed to break-even is: 2. Assume the following information:    Amount Per Unit Sales $ 300,000 $ 40 Variable expenses 112,500 15 Contribution margin 187,500 $ 25 Fixed expenses 137,000 Net operating income $ 50,500    The unit sales to break-even is: 3.Assume the following information: Amount Per...
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs...
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs variable manufacturing costs of $14 per unit. Variable selling expenses are $13 per unit, annual fixed manufacturing costs are $186,000, and fixed selling and administrative costs are $362,800 per year. Contribution margin ratio % Break-even point in dollars Break-even point in units LUCENT MANUFACTURING COMPANY Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Net income
Risk assessment calculations Baseline information: 40,000 units sold at a unit selling price of $100, variable...
Risk assessment calculations Baseline information: 40,000 units sold at a unit selling price of $100, variable costs of $80 per unit, fixed costs of $750,000 1. Calculate the contribution margin per unit in dollars and as a percentage 2. Prepare a financial report in the contribution margin format Calculate the breakeven point in dollars and unit sales 4. Prove the validity of the breakeven calculation by preparing a financial report using the contribution margin format 5. Calculate the performance level...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales Sales Variable costs Contribution margin Fixed costs Net income Sales Variable costs Contribution margin Fixed costs Net income % Sales Variable costs Contribution margin Fixed costs...
Selling price per unit $55 Variable manufacturing costs $23 Annual fixed manufacturing costs $450000 Variable, marketing,...
Selling price per unit $55 Variable manufacturing costs $23 Annual fixed manufacturing costs $450000 Variable, marketing, distribution and administration costs $9 Annual fixed non-manufacturing costs $229000 Annual volume 50000 a. Calculate the contribution margin per unit.                                          b. Calculate the contribution margin ratio. c. Calculate the break-even in units and sales dollars for 2016. d.Calculate the profit earned in 2016.
Current operating income for Bay Area Cycles Co. is $24,000. Selling price per unit is $100,...
Current operating income for Bay Area Cycles Co. is $24,000. Selling price per unit is $100, the contribution margin ratio is 30%, and fixed expense is $96,000. Required: 1. Calculate Bay Area Cycle’s break-even point in units and total sales dollars. 2. Calculate Bay Area Cycle’s margin of safety and margin of safety ratio.
Total fixed cost = $66,000 Selling price per unit = $14 Variable costs per unit =...
Total fixed cost = $66,000 Selling price per unit = $14 Variable costs per unit = $6 Net target income (after tax) = $52,000 Tax rate = 35%. a)Calculate break even point in units b) calculate the sales revenue (in dollars) required to achieve the target income c) calculate the difference in operating income when one extra unit is sold d) if fixed cost increased by 20%, what is the new unit contribution margin required to maintain the same break-even...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT