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Chapter 20: Q26E (page 1126)

Complete the table below for the missing amounts:

A B C

Number of units 2,064 units (d) 2,570 units

Sales price per unit \( 250 \) 125 $ (g)

Variable costs per unit (a) 50 4,528

Contribution margin per unit 125 (e) (h)

Total contribution margin (b) 1,567,500 (i)

Contribution margin ratio (c) (f) 20%

Short Answer

Expert verified

Answer

1. (a) $125

2. (b) $258,000

3. (c) 50%

4. (d) 20,900

5. (e) $75

6. (f) 60%

7. (g) $5,660

8. (h) $1,132

9. (i) $2,909,240

Step by step solution

01

Calculation of sub-part (a),(b), and (c)

A

Number of units 2,064

Sales price per unit $250

Variable cost per unit (Sales price per unit-Contribution margin per unit) (a) $125 ($250-$125)

Contribution margin per unit $125

Total contribution margin (b) (2,064 x $125) (b) $258,000

Contribution margin ratio (c) ($125/250) (c) 50%

02

Calculation of sub-part (d),(e), and (f)

Number of units ($1,567,500/$75) (d) 20,900

Sales price per unit $125

Variable cost per unit $50

Contribution margin per unit (Sales price per unit- Variable cost) (e) $75

Total contribution margin 1,567,500

Contribution margin ratio ($75/$125) (f) 60%

03

Calculation of sub-part (g), (h), and (i)

Number of units 2,570

Sales price per unit ($4,528/(1-20%)) (g) $5,660

Variable cost per unit (a) $4,528

Contribution margin per unit (Sales price per unit- Variable

cost) ($5,660-$4,528) (h) $1,132

Total contribution margin (b) ($1,132 x 2,570) (i) $2,909240

Contribution margin ratio (c) ($1,132 / $5,660) 20%

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Most popular questions from this chapter

Calculating breakeven sales and sales to earn a target profit;preparing a contribution margin income statement

Famous Productions performs London shows. The average show sells 1,000 ticketsat \(60 per ticket. There are 175 shows a year. No additional shows can be held as thetheater is also used by other production companies. The average show has a cast of60, each earning a net average of \)320 per show. The cast is paid after each show. Theother variable cost is a program-printing cost of \(8 per guest. Annual fixed costs total\)459,200.

Requirements

1. Compute revenue and variable costs for each show.

2. Use the equation approach to compute the number of shows Famous Productionsmust perform each year to break even.

3. Use the contribution margin ratio approach to compute the number of showsneeded each year to earn a profit of $4,264,000. Is this profit goal realistic? Giveyour reasoning.

4. Prepare Famous Productions’s contribution margin income statement for 175shows performed in 2018. Report only two categories of costs: variable andfixed.

Calculating breakeven point in units, contribution margin given Mackler, Inc. sells a product with a contribution margin of \(50 per unit. Fixed costs are \)8000 per month. How many units must Mackler sell to break even?

Use the following information to complete Short Exercises S20-10 through S20-15.

Funday Park competes with Cool World by providing a variety of rides. Funday Park sells tickets at \(70 per person as a one-day entrance fee. Variable costs are \)42 per person, and fixed costs are \(170,800 per month.

Refer to the original information (ignoring the changes considered in Short Exercise S20-12). Suppose Funday Park increases fixed costs from \)170,800 per month to $231,000 per month. Compute the new breakeven point in tickets and in sales dollars.

Question: Computing contribution margin, units and required sales to break even, and units to achieve target profit

Compute the missing amounts for the following table.

A B C Sales price per unit \( 200 \) 4,000 $ 5,220 Variable costs per unit 80 1,000 2,088 Total fixed costs 73,200 660,000 3,758,400 Target profit 266,760 3,000,000 3,132,000 Calculate:                          

Contribution margin per unit                          

Contribution margin ratio                          

Required units to break even                          

Required sales dollars to break even

Required units to achieve target profit

Question: Use the following information to complete Short Exercises S20-10 through S20-15.

Funday Park competes with Cool World by providing a variety of rides. Funday Park sells tickets at \(70 per person as a one-day entrance fee. Variable costs are \)42 per person, and fixed costs are $170,800 per month.

Compute Funday Park’s contribution margin ratio. Carry your computation to two decimal places. Use the contribution margin ratio approach to determine the sales revenue Funday Park needs to break even
See all solutions

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