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11 Jun 2018
Pringle Company distributes asingle product. The companyâs sales and expenses for a recent monthfollow:
Total Per Unit Sales $ 310,000 $ 20 Variableexpenses 217,000 14 Contributionmargin 93,000 $ 6 Fixed expenses 75,000 Net operatingincome $ 18,000
Required: 1. What is the monthly break-evenpoint in units sold and in sales dollars?
2. Without resorting tocomputations, what is the total contribution margin at thebreak-even point?
3. How many units would have to besold each month to earn a target profit of $33,000? Use the formulamethod.
4. Refer to the original data. Compute the company's margin ofsafety in both dollar and percentage terms. (Round yourpercentage answer to 2 decimal places.)
5. What is the companyâs CM ratio? If monthly sales increase by$62,000 and there is no change in fixed expenses, by how much wouldyou expect monthly net operating income to increase?
| Pringle Company distributes asingle product. The companyâs sales and expenses for a recent monthfollow: |
| Total | Per Unit | ||||
| Sales | $ | 310,000 | $ | 20 | |
| Variableexpenses | 217,000 | 14 | |||
| Contributionmargin | 93,000 | $ | 6 | ||
| Fixed expenses | 75,000 | ||||
| Net operatingincome | $ | 18,000 | |||
| Required: | |
| 1. | What is the monthly break-evenpoint in units sold and in sales dollars? |
| 2. | Without resorting tocomputations, what is the total contribution margin at thebreak-even point? |
| 3. | How many units would have to besold each month to earn a target profit of $33,000? Use the formulamethod. |
| 4. | Refer to the original data. Compute the company's margin ofsafety in both dollar and percentage terms. (Round yourpercentage answer to 2 decimal places.) |
| 5. | What is the companyâs CM ratio? If monthly sales increase by$62,000 and there is no change in fixed expenses, by how much wouldyou expect monthly net operating income to increase? |
Sixta KovacekLv2
13 Jun 2018
Related questions
| Menlo Company distributes asingle product. The companyâs sales and expenses for last monthfollow: |
| Total | Per Unit | |||||||||||
| Sales | $ | 640,000 | $ | 40 | ||||||||
| Variableexpenses | 448,000 | 28 | ||||||||||
| Contributionmargin | 192,000 | $ | 12 | |||||||||
| Fixed expenses | 152,400 | |||||||||||
| Net operatingincome | $ | 39,600 | ||||||||||
| ||||||||||||
