Information regarding the products is summarized (answer attached)

Problem 7   Music Company produces two models, P Diddy and Eminem. Information regarding the products is summarized for the month of April in the following table:

A.   How much is the weighted average contribution margin ratio based on sales dolalrs?

B.   What level of sales does Music need to earn a before tax profit of $10,000 assuming the current mix?

C.   If you were a salesman for Music, which product would you ‘push’ to customers to achieve the highest profit for your company if customers will each spend $2,000 and are indifferent as to which product? Show calculations and briefly justify your answer.

Problem 8   Smith Company produces desk lamps. The budget information for June indicated that production and sales of 800 units at $25 per unit would generate variable costs of $15 per unit and fixed costs of $7.50 per unit.        

A.  How much is the contribution margin of each desk lamp? 

B.   How many lamps must be sold to generate profit of $5,000?

C.   How much sales dollars must Smith generate to break even?

D.   Suppose Smith operates at $5,000 profit during June. By how many units can sales decline before Smith would incur a net loss? 

E.   What is the accounting name of the concept you calculated in part D?

Problem 9 -Matton Company produces two kinds of buckets: Big Moe and Little Joe. Information regarding these models is shown for May in the following table:

Answer each of the following independent questions.

A. If Matton produces ONLY Big Moe, how many units must it sell to earn operating income of $11,000? 

B.  If Matton can sell as many units as it wishes of either product, which product should it push?

Justify why.

C. How much is the weighted average contribution margin ratio of these products based on sales? 

Problem 10 -  Greenfield Corporation sells calculators at a price of $30 per unit. Variable cost per unit is $10 and fixed costs total $24,000. How much are Greenfield’s sales at breakeven?

Would this amount differ if taxes were 30%?

Problem 11 - Margulais, Inc. produces guitars. The selling price is $2,000 per unit and the variable costs are $1,500 per guitar. Fixed costs per month are $40,000. If Margulais sells 10 more units beyond breakeven, how much does profit increase as a result?  

Problem 12 - Panera Bread sells a box of bagels for with a contribution margin of 62.5%. Its fixed costs are $150,000 per year. How much sales dollars does Panera Bread need to break-even per year if bagels are its only product?

Problem 13 - When fixed costs are $100,000 and variable costs are 20% of the selling price, then how much are breakeven sales?

Problem 14 - Xenoc produces stereo speakers and sells them for $800 per pair. The variable cost per pair of speakers is $300. Fixed costs per month are $50,000. The company sold 120 pairs of speakers in May resulting in a $10,000 pre-tax profit. Break even point is 100 pairs of speakers per month. How much is the margin of safety in dollars?

Problem 15 - Olsen Drug Stores has three product lines: Drugs ($500,000 sales, 25% contribution margin ratio), Cosmetics ($250,000 sales, 50% contribution margin ratio), and Housewares ($100,000 sales, 30% contribution margin ratio). How much is profit expected to increase if drug sales increase by $80,000 and the other product levels stay the same?

Problem 16 - The following is from Regetta Cos income statement for last month:

Calculate the break even point in units.

Calculate margin of safety in units. 

Problem 17 Copedge, Inc. reported sales in 2006 totaling $800,000 with a selling price per unit of $40, a contribution margin per unit of $16.80, and fixed costs of $176,320. How many units must Copedge sell to achieve operating income of $32,000 in 2007?             

Problem 18 - The following monthly data are available for Marshall, Inc. and its only product: Unit sales price, $36; Unit variable expenses, $28; Total fixed expenses, $50,000; Actual sales for the month of May, 7,000 units. How much cushion does Marshall have in sales dollars before it incurs a loss?

Problem 19 - Caterson, Inc. sells a single product with a contribution margin of $18 per unit and fixed costs of $82,800. How much is Caterson’s break even point?

Problem 20 - Martin’s variable costs are 35% of sales. Its selling price is $100 per unit. If Martin sells one unit more than break even units, how much will profit increase?