Please show work and how it is computed. Zook Company developed the following information for the product
Question:
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 MarginContribution 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...
Step by Step Answer:
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura