3. After reviewing its cost structure (variable costs of P7.50 per unit and monthly fixed costs of P60,000) and potential market, F Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales . . P500,000 Variable costs . 375,000 Contribution margin . 125,000 Fixed costs . 60,000 ................. Income before taxes 65,000 Income tax (40%) 26,000 Net income . P 39,000 Using the above information, compute the following: a. What selling price did the company establish. b. What is the contribution margin per unit? c. What is the break even point in units?

3. After reviewing its cost structure (variable costs of P7.50 per unit and monthly fixed costs of P60,000) and potential market, F Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales . . P500,000 Variable costs . 375,000 Contribution margin . 125,000 Fixed costs . 60,000 ................. Income before taxes 65,000 Income tax (40%) 26,000 Net income . P 39,000 Using the above information, compute the following: a. What selling price did the company establish. b. What is the contribution margin per unit? c. What is the break even point in units?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3PB

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Similar questions

Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
If a company has fixed costs of $6.000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? A. 100 B. 180 C. 200 D. 2,000
A projected income statement of Hailwork’s company for the coming year follows: Sales $506300 |Total Variable Cost 170865 Contribution Margin ? Total Fixed Cost 175000 Operating Income ? Compute contribution margin and contribution margin ratio Compute the Operating Income How much revenue must be earned in order to breakeven What is the effect on contribution margin ratio if the unit selling price and unit variable cost increase by 10 percent each?
After reviewing its cost structure (variable costs of P6.00 per unit and monthly fixed costs of P120,000) potential market, Fore Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales P500,000 Variable costs 300,000 Contribution Margin 200,000 Fixed costs 120,000 Income before taxes 80,000 Income taxes (40%) 32,000 Net income 48,000 Compute for the following: 1. If the company wants an after-tax profit of P45,000 on its expected sales volume of 50,000 units, what price must it charge? 2. If the company wants a before-tax return on sales of 16% on its expected sales volume of 50,000 units, what price must Fore charge? 3. The company is considering offering its sales people a 5% commission on sales. What would be the total peso sales required in order to implement the commission plan and still earn the planned pre-tax income of P80,000?
After reviewing its cost structure (variable costs of P6.00 per unit and monthly fixed costs of P120,000) potential market, Fore Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales P500,000 Variable costs 300,000 Contribution Margin 200,000 Fixed costs 120,000 Income before taxes 80,000 Income taxes (40%) 32,000 Net income 48,000 Compute for the following: 4. If the company determined that a particular advertising campaign had a high probability of increasing sales by 3,000 units, how much could it pay for such campaign without reducing its planned profits? 5. A plan includes an increase in advertising cost of P20,000. What is the minimum increase in unit sales to compensate for the increase in advertising cost? 6. If the company wants a P60,000 before-tax profit, how many units must it sell? 7. If the company wants a 10% before tax return on sales, what…
After reviewing its cost structure (variable costs of P6.00 per unit and monthly fixed costs of P120,000) potential market, Fore Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales P500,000 Variable costs 300,000 Contribution Margin 200,000 Fixed costs 120,000 Income before taxes 80,000 Income taxes (40%) 32,000 Net income 48,000 Compute for the following: 1. If the company wants a 10% before tax return on sales, what level of sales peso does it need? 2. If the company wants a P45,000 after-tax profit, how many units must it sell? 3. If the wants an after return on sales of 9%, how many units must it sell?
After reviewing its cost structure (variable costs of P6.00 per unit and monthly fixed costs of P120,000) potential market, Fore Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales P500,000 Variable costs 300,000 Contribution Margin 200,000 Fixed costs 120,000 Income before taxes 80,000 Income taxes (40%) 32,000 Net income 48,000 Compute for the following: 1. Assuming that the cost structure and the selling price remain constant, what is the percentage of change in profit and the new expected profit if the company can sell 55,000 units? 2. The operations manager believes variable cost will increase to P8.25 per unit. The sales manager believes increasing selling price may not be a good decision. What is the new breakeven point in units? 3. The operations manager believes variable cost will increase to P8.25 per unit. The sales manager believes that the…
After reviewing its cost structure (variable costs of P6.00 per unit and monthly fixed costs of P120,000) potential market, Fore Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month and planned its monthly results as follows: Sales P500,000 Variable costs 300,000 Contribution Margin 200,000 Fixed costs 120,000 Income before taxes 80,000 Income taxes (40%) 32,000 Net income 48,000 Compute for the following: 1. What is the contribution margin ratio? 2. What is the breakeven point in units? 3. All other factors remain unchanged, how much increase in profit before tax would Fore expect if the number of units sold is 55,000? 4. If the company determined that a particular advertising campaign had a high probability of increasing sales by 3,000 units, how much could it pay for such campaign without reducing its planned profits? 5. A plan includes an increase in advertising cost of P20,000. What is the minimum…
For the coming year, Cleves Company anticipates a unit selling price of $80, a unit variabie cost of $40, and fixed costs of $248,000. Required: 1. Compute the anticipated break-even sales (units). units 2. Compute the sales (units) required to realize a target profit of $96,000. units
For the coming year, Bepis Inc. anticipates fixed costs of $700,000, a unit variable cost of $85, and a unit selling price of $105. The maximum sales within the relevant range are $2,500,000. a. Construct a cost-volume-profit chart. b.Estimate the break-even sales (dollars) by using the cost-volume-profit chart constructed in part (A). c. What is the main advantage of presenting the cost-volume-profit analysis in graphic form rather than equation form?
Suppose that a company expects the fo llowing financial resuJts from a project during its first year ope ration:• Sales revenue: $250.000• Variable costs: $80.000• Fixed costs: $50.000• Total unit produced and so ld: 1,000 units(a) Compute the contribution ma rgin pe rcentage.(b) Compute the brcakcven point in units sold.