Question
2. LoL Incorporation produces 2 types of products, namely M-35 and K-11. The Segment Profit/Loss Statement for the year ended 31 December 2020 is M-35
2. LoL Incorporation produces 2 types of products, namely M-35 and K-11. The Segment Profit/Loss Statement for the year ended 31 December 2020 is
M-35 | K-11 | Total | |
Sales | $ 6,000,000 | $4,500,000 | $10,500,000 |
Variable Expenses | 3,600,000 | 1,800,000 | 5,400,000 |
Contribution Margin | $ 2,400,000 | $2,700,000 | $ 5,100,000 |
Direct Fixed Expenses | 1,600,000 | 1,800,000 | 3,400,000 |
Segment income | $ 800,000 | $ 900,000 | $ 1,700,000 |
Common Fixed Expenses | 1,088,000 | ||
Operating Income | $ 612,000 |
The mix between the M-35 and K-11 is 2: 3. The selling price per unit of the M-35 is $200, while the K-11 is $100.
(1) Calculate the package BEP in units and dollars! Calculate the BEP of each product in units and dollars (2) If the company wants to make a package profit of $1,462,000; calculate how many units of the package and dollars to sell! Calculate how many units must be sold for each product for this purpose! (3) Calculate the Margin of Safety ratio if you want to get the profit target above! (4) Calculate the Degree of Operating Leverage to achieve the profit target above atss@ (5) If the company wants to earn a package profit after tax of $1,751,000; calculate how many units of the package and dollars to sell! (6) Describe and explain the conditions in which the company neither gains nor loses!
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