Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Alden Company wishes to present its operating results for the year ended December 31, 2020 in the form of a contribution margin income statement. Alden
Alden Company wishes to present its operating results for the year ended December 31, 2020 in the form of a contribution margin income statement. Alden Company produces a single product and has a relevant range between 3,000 units and 5,000 units. Total costs range from $360,000 to $420,000 at the low and high ends of the relevant range, respectively. Sales volume in 2020 was 4,200 units, and income after taxes was $75,600. Alden's product is highly specialized; therefore, no units are kept in inventory. Alden's income tax rate is 30%. Do not enter "$" and "," for your answers. 1. Using the high-low method, estimate the cost function and calculate: $ (a) the total fixed costs (b) the variable costs per unit $ 2. In planning for the next year's budget, what are the total costs if the total units produced for 2021 are 4,500 units? 3. Based on the answer in (1) and the sales volume in 2020, calculate: $ (a) total contribution margin $ (b) contribution margin per unit (c) contribution margin ratio % $ (d) selling price per unit 4. Based on the answers in (1) and (3), calculate units (a) the break-even point in units $ (b) break-even point in dollars. 5. Calculate (a) the margin of safety in units units (b) the degree of operating leverage (c) What is the impact on net income, if sales increase by 10%? $ 6. Calculate Sales dollars required to yield an after-tax profit of 21% of sales
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