Question
6.In Eusey Ltd, the Speedo pocket calculator sells for 40, and variable costs per unit are estimated to be 22. What is the contribution margin
6.In Eusey Ltd, the Speedo pocket calculator sells for 40, and variable costs per unit are estimated to be 22. What is the contribution margin per unit and the contribution margin ratio?
7.Inwood Pty Ltd's break-even sales are 600 000. Assuming fixed costs are 210 000, what sales dollars are needed to achieve a target profit of 56 000?
E16.6In 2016, Wiggins Ltd had a break-even point of 350 000 based on a selling price of 7 per unit and fixed costs of 105 000. In 2017, the selling price and the variable cost per unit did not change, but the break-even point increased to 455 000.
Required
(a)Calculate the variable cost per unit and the contribution margin ratio for 2016.
(b)Calculate the increase in fixed costs for 2017.
PSA16.5Tyson Ltd bottles and distributes NO-KAL, a diet soft drink. The beverage is sold for 40 cents per 600 ml bottle to retailers, who charge customers 60 cents per bottle. At full (100%) plant capacity,, management estimates the following revenues and costs:
Nets sales1 800 000Selling expenses - variable80 000
Direct materials400 000Selling expenses - fixed65 000
Direct labour280 000Administrative expenses - variable20 000
Manufacturing overhead - variable 300 000Administrative expenses - fixed52 000
Manufacturing overhead - fixed283 000
Required
(a)Prepare CVP statement of profit or loss for 2016 based on management's estimates.
(b)Calculate the break-even point in (1) units and (2) dollars.
(c)Calculate the contribution margin ratio and the margin of safety ratio (round to nearest percentages).
(d)Determine the sales required to earn profit of 150 000.
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