Compute the answers to each of the following independent situations. a. SmallCo sells two products, M and

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Compute the answers to each of the following independent situations.

a. SmallCo sells two products, M and N. The sales mix of these products is 2:4, respectively. M has a contribution margin of $10 per unit, and N has a contribution margin of $5 per unit. Fixed costs for the company are $90,000. What would be the total units of N sold at the break-even point?

b. Brooke Company has a break-even point of 2,000 units. At breakeven, variable costs are $3,200 and fixed costs are $800. If the company sells one unit over breakeven, what will be the pretax income of the company?

c. Cool Cologne sells its product for $5 per bottle. The fixed costs of the company are $108,000. Variable costs amount to 40 percent of selling price. What amount of sales (in units) would be necessary for Cool Cologne to earn a 25 percent pretax profit on sales?

d. Johnston Company has a break-even point of 1,400 units. The company is currently selling 1,600 units for $65 each. What is the margin of safety for the company in units, sales dollars, and percentage?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Cost Accounting Traditions and Innovations

ISBN: 978-0324026450

4th edition

Authors: Barfield Jesse, Raiborn Cecily, Kinney Michael

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