Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you confirm if my answers are correct? Select Yes or No from the following ratios that can be computed by contribution margin: No Price

image text in transcribed

Can you confirm if my answers are correct?

Select "Yes or No" from the following ratios that can be computed by contribution margin: No Price - unit variable cost Yes Unit contribution margin/Price Yes Total contribution margin/Price No Total contribution margin/Sales No (Price - unit variable cost)/Price Yes (Price - unit variable cost)/Sales Price/(Price - unit variable cost) Yes (1 - variable cost ratio)/Price Yes Price/Unit contribution margin (1 - variable cost ratio) Yes Example: Kalman Company makes vases. Last year, Kalman sold 5,000 vases at a price of $12 and had unit variable cost of $3. Total fixed costs were $37,800. The contribution margin ratio was 0.75 . Breakeven sales were $ No the original Suppose Kalman Company had a contribution margin ratio of 40%, the breakeven sales dollars would be higher than scenario. Breakeven sales dollars = Total fixed cost/contribution margin ratio = $31,500/0.4 = $78,750 Now suppose Kalman Company had a contribution margin ratio of 80%, the breakeven sales dollars would be higher than scenario. the original Breakeven sales dollars = Total fixed cost/contribution margin ratio = $31,500/0.8 = $39,375

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial accounting

Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin

1st edition

471467855, 978-0471467854

More Books

Students also viewed these Accounting questions