Question
1. Cost-Volume Profit Analysis Recline Company is planning to produce and sell 12,500 units of its only product at a unit price of $100. At
1. Cost-Volume Profit Analysis
Recline Company is planning to produce and sell 12,500 units of its only product at a unit price of $100. At this sales level Recline Company will generate $400,000 in total contribution margin and incur fixed costs of $25/unit.
a. Calculate Reclines contribution margin ratio.
Round answer to the nearest whole percentage (ex: 0.3456 = 35%)
__________%
b. Calculate the break-even point in sales dollars for Recline.
Use your rounded answer from part a. above and then round final answer to the nearest dollar.
$_________
2. Cost-Volume Profit Analysis Hailstorm Company sells a single product for $22 per unit. Variable costs are $14 per unit and fixed costs are $80,000 at an operating level of 7,000 to 12,000 units.
a. What is Hailstorm Company's break-even point in units?
______ units
b. How many units must be sold to earn $12,000 before income tax?
______ units
c. How many units must be sold to earn $13,000 after income tax, assuming a 35% tax rate?
______ units
3. Break-Even with Multiple Products Warner Company has $189,200 of total fixed costs and sells products A and B with a product mix of 40% A and 60% B. Selling prices and variable costs for A and B result in contribution margins per unit of $11 and $7, respectively. Compute the break-even point.
Enter product mix answers in decimal form. Round weighted average unit contribution margin to two decimal places, if applicable.
Product | Product Mix | Contribution Margin per unit | Weighted average unit contribution margin |
---|---|---|---|
A | Answer | Answer | $ Answer |
B | Answer | Answer | $ Answer |
$ Answer |
Break-even point = ______ units
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