Question

Helicopter Rides.The price of each ticket is $150 and the variable costs average $60 per person....

Helicopter Rides.The price of each ticket is $150 and the variable costs average $60 per person. Steve's monthly fixed costs are $58,500.

1. What is Steve's contribution margin per ride?

2. How many tours must the company conduct in a month to break even?

3. What sales revenue is needed to produce a net profit of $36,000 per month?

4. What is Steve's contribution margin ratio?

5. If annual sales increase by $100,000, by what amount will operating income increase?

6. If annual sales decrease by $50,000, by what amount will operating income decrease?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Contribution margin per ride = Price - Variable Cost

= $ 150 - $ 60

= $ 90 per ride

2. Break Even Point ( in Tours) = Fixed Cost / Contribtuion Margin Per Ride

= $ 58,500 / $ 90

= 650 tours

3. Net Profit Required = $ 36,000

Add: Fixed Cost = $ 58,500

Total Contribution Required= $ 94,500

Contribution margin per ride = $ 90

Sales Units needed to achieve required profit = Contribution margin / Contribution margin per ride

= $ 94,500 / $ 90

= 1,050

Hence,Sales Revenue needed to achieve required profit = Sales Units needed to achieve required profit * Selling Price

= 1,050 * $ 150

= $ 157,500

Hence the correct answer is $ 157,500

4. contribution margin ratio = contribution margin per ride / price per ride *100

= $ 90 / $ 150 *100

= 60.00%

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
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs...
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs amount to $84 per unit. The fixed costs are $42,000 per month (round any units to the next highest full unit). Calculate: (show your calculations and round to 2 decimal places) What is the contribution margin per unit? What is the contribution margin ratio per unit? What is the monthly sales volume (in dollars) at the break-even point? How many units must be sold...
1. A company's product sells for $150 and has variable costs of $60 associated with the...
1. A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? a. $150 b. $90 c. $60 d. $40 2. A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase? a. $1,250 b. $8,750 c. $3,750 d. $5,000 3. If a company has fixed costs of $6,000 per...
Narchie sells a single product for $50. Variable costs are 60% of the selling price, and...
Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 36,000 units. A. In order to produce a target profit of $22,000, Narchie's dollar sales must total: B. If Narchie sells 24,000 units, its safety margin will be: C. What is Narchie’s operating leverage? D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point. 1....
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...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable costs are $76 per unit. The company’s annual fixed costs are $338,400. (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 $ (2) Assume the company’s fixed costs increase by $126,000. What amount of sales (in dollars) is needed...
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...
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $192 per unit. The company’s annual fixed costs are $734,400. (1) Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point. (2) Assume the company’s fixed costs increase by $138,000. What amount of sales (in dollars) is needed to break even? BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of...
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...
#1 Zeke Company sells 23,800 units at $16 per unit. Variable costs are $8 per unit,...
#1 Zeke Company sells 23,800 units at $16 per unit. Variable costs are $8 per unit, and fixed costs are $37,400. The contribution margin ratio and the unit contribution margin are 50% and $8 per unit 2% and $16 per unit 50% and $16 per unit 2% and $8 per unit #2 Variable costs as a percentage of sales for Lemon Inc. are 63%, current sales are $502,000, and fixed costs are $186,000. How much will operating income change if...
Kidd Corp. reports the following for 2021 on 100,000 unit sales: Sales $1,000,000 Variable costs 550,000...
Kidd Corp. reports the following for 2021 on 100,000 unit sales: Sales $1,000,000 Variable costs 550,000 Contribution margin 450,000 Fixed costs 300,000 Net income $ 150,000 Kidd's management is proposing a 5% price increase for 2022 ($10.00 to $10.50 per unit), and it expects the resulting weaker demand for its product to result in a 7% decrease in volume (100,000 units to 93,000 units). If the price change is adopted and the assumptions are correct, Kidd's break even point (in...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT