ACCT 2200 Study Guide - Midterm Guide: Earnings Before Interest And Taxes, Contribution Margin, Gross Margin

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erinhorse521

18 Mar 2016

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Cogs = beginning merchandise inventory + purchases ending merchandise inventory. Proit = (sales variable expenses) ixed expenses . sales expenses. Proit = (p x q v x q) ixed expenses. Unit contribuion margin = selling price per unit variable expenses per unit. Proit = unit cm x q ixed expenses. Unit sales to atain the target proit = target proit + ixed expenses/unit cm. Dollar sales to atain target proit = target proit + ixed expenses/cmr. Unit sales to break even = ixed expenses/unit cm. Margin of safety in dollars = actual(budgeted) sales break even sales. Margin of safety percentage = margin of safety in dollars/total actual(budgeted) sales dollars. Change in proit due to change in sales and ixed expenses = cmr * change in sales change in ixed expenses. Allocaion base: direct labor hours or direct machine hours. Predetermined overhead rate (por) = est. total moh cost/ est. total amount of allocaion base = por.

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Plyler Enterprises sells garage doors in Erie, PA and hasprovided the following information:

# of unitssold 15,000

Average sellingprice $25per unit

Variable sellingexpense $5per unit

Variable administrativeexpense $2.50per unit

Fixed sellingexpenses $50,000

Fixed Administrativeexpenses $30,000

Inventory atbeginning $32,000

Inventory atend $50,000

Inventorypurchases $152,000

1. Provide the figures for the TRADITIONAL income statementbelow for Plyler Enterprises (ignore taxes):

Account	Amount	Show Calculations
Sales
Cost of goods sold
Gross margin		Sales less cost of goods sold
Selling expenses
Administrative expenses
Net operating income		Gross margin less Selling and Administrative

2. Provide the figures for the CONTRIBUTION FORMAT incomestatement below for Plyler Enterprises (ignore taxes):

Account	Amount	Show Calculations
Sales
Variable expenses:
Cost of goods sold
Selling expenses
Administrative exp.
Contribution margin		Sales less variable expenses
Fixed expenses:
Selling expenses
Administrative exp.
Net operating income		Sales less variable and fixed expenses

coralleopard451

EXERCISE 5-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio [LO5-1, L05-3, L05-5, L05-6, L05-7] Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $30 Total $450,000 180,000 270,000 216,000 $ 54,000 Variable expenses ...... Contribution margin. Fixed expenses Net operating income ....... 12 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to earn a target profit of $90,000? Use the formula method. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and per- centage terms. 5. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:


Sales	$	270,000
Beginning merchandise inventory	$	18,000
Purchases	$	180,000
Ending merchandise inventory	$	9,000
Fixed selling expense	$	?
Fixed administrative expense	$	10,800
Variable selling expense	$	13,500
Variable administrative expense	$	?
Contribution margin	$	54,000
Net operating income	$	16,200

Required:

1. Prepare a contribution format income statement.

Todrick Company
Contribution Format Income Statement

Variable expenses:
	$0



		0

Fixed expenses:



		0

scarletgoose537

ACCT 2200 Study Guide - Midterm Guide: Earnings Before Interest And Taxes, Contribution Margin, Gross Margin

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