Question
Bottling Company Inc. Income Statement For the Year Ended October 31st, XXXX Revenue $650,000.00 Cost of Goods Sold Labour $75,000.00 Material $50,000.00 Total Cost of
Bottling Company Inc.
Income Statement
For the Year Ended October 31st, XXXX
Revenue $650,000.00
Cost of Goods Sold
Labour $75,000.00
Material $50,000.00
Total Cost of Goods Sold
$125,000.00
Gross Profit $525,000.00
Expenses
Packaging Labour $67,000.00
Electricity $14,000.00
Amortization $32,000.00
Rent $15,000.00
Shipping $160,000.00
Total Expenses
$288,000.00
Net Income
$237,000.00
Current number of unit produced: 12,000
Number of Employees on Staff: 521
Original cost of Smelting Machinery: $85,000
Number of Shares Outstanding: 125,000
Trading Price per Share: $12
1.Identify all the expenses above as being either Fixed or Variable. For expenses labeled Shipping, Amortization and Electricity, explain why you chose either fixed or variable.
2.Using your cost behaviour breakdown, calculate the Contribution Margin for each unit produced.
3.What would be the number of units necessary to produce for a breakeven scenario?
4.Management has recently discovered that they are now able to lower their labour costs from 67,000 to 55,000 within the year with all other costs remaining the same.What is the Contribution Margin now?
5.Calculate the Gross Profit Margin and Net Profit Margin Ratios.
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