Please show work and how it is computed. Zook Company developed the following information for the product

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Please show work and how it is computed.

Zook Company developed the following information for the product it sells:

Sales price ............... $50 per unit

Variable cost of goods sold ....... $23 per unit

Fixed cost of goods sold ......... $700,000

Variable selling expense ...... 11% of sales price

Variable administrative expense ....... $2.00 per unit

Fixed selling expense ........... $400,000

Fixed administrative expense ........ $300,000


For the year ended December 31, 2008, Zook Company produced and sold 90,000 units of product.

(a) Prepare a detailed CVP income statement using the contribution margin format for Zook Company for 2008.

(b) Compute the contribution margin per unit.

(c) Compute the contribution margin ratio.

(d) Compute the break-even point in dollars.

(e) Compute the margin of safety in dollars.

(f) Compute the margin of safety ratio.

(g) Compute the number of units to be sold to earn a target income of 800000.

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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Related Book For  book-img-for-question

Horngrens Financial and Managerial Accounting

ISBN: 978-0133866292

5th edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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