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Can you show how to arrive at this solution? Question 22 0/3 pts Using the attached Exhibit A, and assuming fixed costs also had to
Can you show how to arrive at this solution?
Question 22 0/3 pts Using the attached Exhibit A, and assuming fixed costs also had to include the initial production run of $300,000 in addition to the other fixed costs of $50,000, Trivia Inc's breakeven in units becomes (rounded): 70,423 You Answered 23,474 11,737 None of these are correct Correct Answer 82,160 R & R Case Trivia, Inc Financial Summary Exhibit A Assumptions Units Sold Note: commas should be Trivia, Inc read as decimals here: Income Statement Total Unit Cost Sales 7.250.000 5 12.50 Breakevell 11.737 Units Variable Fixed Costs Contribution per Unit) COGS 1.798.000 $ 3.10 Sales Commisions (20%) 1,450,000 $ 250 Breakever 146,714 Factor (1%) 75.400$ 0.13 Fixed costs contribution margin} Ad Allowance (5%) 365,400 $ 0.63 TV Guide Royalty (10%) 725,000 $ 125 Invention Royalty (5%) 365.400$ 0.53 Total Variable Costs 4.779.2005 8.24 Contribution 2.470.800 $ 4.25 Contributi 34.08% (Contributionsales Fixed Costs Design & Launch 50.000 Bad Debts (Estimated) 15.000 Inventory Write Down 100 Pretax Profit 2,305,800 Contrast with Parker Brothers Breakeven....... Fixed Costs of Design Development Advertising and Promotion $ 1.250.000 Breakevert 221.239 Units (Fixed Costs Contribution per Unit) Contribution Per Unit Trivia Inc or Reiss's Contribution per Unit 4.25 Breakeven 2.765.487 Factor not Required 0.13 Fixed costs/contribution margin) Advertising Expense in Fixed Cost 0.63 No Inventor Royalty 0.63 Contribution per unit for Parker Brothers 3 5155 Contributi 45.20% (Contribution sales ---...which has a higher contribution, but much higher overhead Contribution per unit (Selling Price per Unit - Variable Costs per Unit) Contribution Margin: (Selling Price per Unit - Variable Costs per Unity/Selling Price per Unit Break-even in units: Fixed Costs/Contribution per Unit Break-even in Sales: Fixed Costs/Contribution Margin Note: Contribution Margin is not the same as Gross Margin. In this case, Gross Margin (Gross profit/ Sales) is 75.2%. This is a much higher percentage than the Contribution Margin because Gross Margin only deals with COGS, while Contribution Margin deals with all variable costs. unuStep by Step Solution
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