ACCT640 - Chapter 3 - Homework

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Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and fixed expenses were $45,000.

  

Required:
1.

What is the company’s contribution margin (CM) ratio?

 

 

 

2.

Estimate the change in the company’s net operating income if it were to increase its total sales by $1,500.

 

 

 

Maxson Products distributes a single product, a woven basket whose selling price is $8 and whose variable cost is $6 per unit. The company’s monthly fixed expense is $5,500.

 

 

1.

Compute for the company’s break-even point in unit sales using the equation method.

 

2.

Compute for the company’s break-even point in sales dollars using the equation method and the CM ratio.

 

 

 

 

 

3.

Compute for the company’s break-even point in unit sales using the formula method.

 

 

4.

Compute for the company’s break-even point in sales dollars using formula method and the CM ratio

 

Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budget appear below:

 

   
  Selling price$25 per unit
  Variable expenses$15 per unit
  Fixed expenses$8,500 per month
  Unit sales1,000 units per month

 

Required:
1.

Compute the company’s margin of safety.

 

2.

Compute the company’s margin of safety as a percentage of its sales.

 

 

 

    • 13 years ago
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