Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ajack, using the marginal costing income statement, reports the following for sales of 100,000 units: Sales $750,000 Variable costs $400,000 Contribution margin $350,000 Fixed costs
Ajack, using the marginal costing income statement, reports the following for sales of 100,000 units: Sales $750,000 Variable costs $400,000 Contribution margin $350,000 Fixed costs $210,000 Net income $140,000 (a) Determine the break-even point in units for Ajack. (b) Assume that Ajack intends to have a profit of 20% more than the current profit. How many units must he sell to achieve his target? (c) Ajack believes that the company could increase sales by 8,000 units. However, this will increase fixed costs by $22,000. What will be Ajacks estimated income in this situation? Does the profit increase or decrease? (2 marks) (d) What will the companys new break-even point, assuming that Ajacks fixed costs increase by $22,000? (e) What is contribution margin and how can it be expressed
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started