(Comprehensive) Compute the answers to each of the following indepen dent situations. a. Orlando Ray sells liquid...
Question:
(Comprehensive) Compute the answers to each of the following indepen¬ dent situations.
a. Orlando Ray sells liquid and spray mouthwash in a sales mix of 2:4, re¬ spectively. The liquid mouthwash has a contribution margin of $10 per unit; the spray’s CM is $5 per unit. Annual fixed costs for the company are $100,000. How many units of spray mouthwash would Orlando Ray sell at the break-even point?
b. Piniella Company has a break-even point of 4,000 units. At BEP, variable costs are $6,400 and fixed costs are $1,600. If one unit over break-even is sold, what will be the company’s pre-tax income?
c. Montreal Company’s product sells for $10 per bottle. Annual fixed costs are $216,000 and variable cost is 40 percent of selling price. How many units would Montreal Company need to sell to earn a 25 percent pre-tax profit on sales?
d. York Mets Company has a BEP of 2,800 units. The company currently sells 3,200 units at $65 each. What is the company’s margin of safety in units, in sales dollars, and as a percentage?
Step by Step Answer:
Cost Accounting Foundations And Evolutions
ISBN: 9780324235012
6th Edition
Authors: Michael R. Kinney, Jenice Prather-Kinsey, Cecily A. Raiborn