Accounting 2

EA  1. 

LO 3.1 Calculate the per-unit contribution margin of a product that has a sale price of $200 if the variable costs per unit are $65.

EA  3. 

LO 3.1 A product has a sales price of $150 and a per-unit contribution margin of $50. What is the contribution margin ratio?

EA  5. 

LO 3.2 Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The company’s monthly fixed expenses are $22,500.

A. What is the company’s break-even point in units?

B. What is the company’s break-even point in dollars?

C. Construct a contribution margin income statement for the month of September when they will sell 900 units.

D. How many units will Maple need to sell in order to reach a target profit of $45,000?

E. What dollar sales will Maple need in order to reach a target profit of $45,000?

F. Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.

EA  13. 

LO 3.5 Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000 and a 20% contribution margin. Company B’s fixed costs are $500,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 25% increase in sales? Explain why.

EA  14. 

LO 3.5 Marshall & Company produces a single product and recently calculated their break-even point as shown.

What would Marshall’s target margin of safety be in units and dollars if they required a $14,000 margin of safety?