Question

ABC Company reported the following information for May: contribution margin ratio ......... 56% fixed costs ....................... $133,000 variable cost per unit ............ $22 For the month of June, ABC Company expects its fixed costs to increase by $42,750 while the variable cost per unit will not change (it will remain at $22 per unit). Calculate theselling price per unitof ABC Company's productneeded in June in order to maintain the same break-even pointin units as in May.

Answer #1

Contribution margin =Selling price – Variable cost

If variable cost is 22 per unit and Contribution margin is 56% then it means Variable cost is 44% of sales.

So we get sales price is ($22/44 x 100) =$50

We know that at breakeven fixed cost is equal to contribution margin.

Number of units sold =Contribution margin in $ /Contribution per unit

Number of units sold =$133000/28

Number of units sold =4750

Now when selling price is changing from 133000 to $175750 we need to calculate a price at which company covers all its fixed cost.

Increased fixed cost to recover |
$ 175,750.00 |

Variable cost to recover (4750x 22) |
$ 104,500.00 |

Total Revenue to breakeven |
$ 280,250.00 |

Number of units |
4750 |

Sales price per unit |
$ 59.00 |

New selling price would be $ 59

XYZ Company reported the following information for June:
contribution margin per unit ......... $24
fixed costs .......................... $180,000
variable cost per unit ............... $36
For the month of July, XYZ Company expects its fixed costs to
increase by $90,000 while the variable cost per unit will not
change (it will remain at $36 per unit).
Calculate the selling price per unit of XYZ Company's product
needed in July in order to maintain the same break-even point
in units as in...

If the variable cost % is .60 , find the contribution margin
%
Fixed costs= 400 , contribution margin % is .40.
Find sales dollars needed to break even.
Fixed costs= 500 , contribution margin per unit =10. Find sales
in units to earn a net income of 100.
Selling price per unit= 80 ; variable costs per unit= 60; fixed
costs= 200.
Find the contrib.
margin %.

Contribution Margin and Contribution Margin Ratio
For a recent year, Wicker Company-owned restaurants had the
following sales and expenses (in millions):
Sales
$20,300
Food and packaging
$7,910
Payroll
5,100
Occupancy (rent, depreciation, etc.)
3,680
General, selling, and administrative expenses
3,000
$19,690
Income from operations
$610
Assume that the variable costs consist of food and packaging,
payroll, and 40% of the general, selling, and administrative
expenses.
a. What is Wicker Company's contribution
margin? Round to the nearest million. (Give answer in...

Given the following information for Baugh Company:
Total fixed
costs
$78,000
Unit variable
costs
$24
Unit selling
price
$36
Required:
a. Compute the contribution margin per
unit.
b. Compute the contribution-margin ratio.
c. Compute the break-even point in units.
d.
Compute the break-even volume in dollars

The following information is available for a company’s
maintenance cost over the last seven months.
Month
Maintenance Hours
Maintenance Cost
June
9
$
4,590
July
18
7,110
August
12
5,430
September
15
6,270
October
21
7,950
November
24
8,790
December
6
3,750
Using the high-low method, estimate both the fixed and variable
components of its maintenance cost.
High-Low method - Calculation of variable cost per maintenance
hour
0
Total cost at the high
point
Variable costs at the high
point:...

CVP ANALYSIS
If the variable cost % is .60 , find the contribution
margin %
Fixed costs= 400 , contribution margin % is .40. Find
sales dollars needed to break even.
Fixed costs= 500 , contribution margin per unit =10.
Find sales in units to earn a net income of 100.
Selling price per unit= 80 ; variable costs per unit=
60; fixed costs= 200.
Find the contrib. margin
%.
Actual sales=600 ; break even sales =400 ; contribution
margin=...

Variable Costs, Contribution Margin, Contribution Margin
Ratio
Super-Tees Company plans to sell 13,000 T-shirts at $18 each in
the coming year. Product costs include:
Direct materials per T-shirt
$6.30
Direct labor per T-shirt
$1.26
Variable overhead per T-shirt
$0.54
Total fixed factory overhead
$37,000
Variable selling expense is the redemption of a coupon, which
averages $0.90 per T-shirt; fixed selling and administrative
expenses total $17,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round...

PA6-1 Calculating Contribution Margin, Contribution Margin
Ratio, Break-Even Point [LO 6-1, 6-2]
Hermosa, Inc., produces one model of mountain bike. Partial
information for the company follows:
Number of bikes produced and
sold
520
850
950
Total costs
Variable costs
$
129,480
$
?
$
?
Fixed costs per year
?
?
?
Total costs
?
?
?
Cost per unit
Variable cost per unit
?
?
?
Fixed cost per unit
?
?
?
Total cost per unit
?...

Contribution Margin: Unit Amounts
Consider the following information on four independent
companies.
A
B
C
D
Sales
$10,000
$?
$?
$9,000
Less: Variable costs
8,000
11,700
9,750
?
Contribution margin
$2,000
$7,800
$?
$?
Less: Fixed costs
?
4,500
?
900
Operating income
$1,000
$?
$8,000
$2,850
Units sold
?
1,300
300
500
Price/Unit
$4
$?
$?
$?
Variable cost/Unit
$?
$9
$?
$?
Contribution margin/Unit
$?
$6
$?
$?
Contribution margin ratio
?
?
75%
?
Break-even in units...

Cornerstone Exercise 16.1 (Algorithmic)
Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 15,000 T-shirts at $16 each in
the coming year. Product costs include:
Direct materials per T-shirt
$5.60
Direct labor per T-shirt
$1.12
Variable overhead per T-shirt
$0.48
Total fixed factory overhead
$43,000
Variable selling expense is the redemption of a coupon, which
averages $0.80 per T-shirt; fixed selling and administrative
expenses total $19,000.
Required:
1. Calculate the following values:
Round dollar amounts to the...

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