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Capstone, Inc. markets a simple water control and timer that it mass-produces. During 2019, the company sold 650,000 units at an average selling price of
- Capstone, Inc. markets a simple water control and timer that it mass-produces. During 2019, the company sold 650,000 units at an average selling price of per solution $10.00 per unit. The variable expenses were $1,825,000, and the fixed expenses were $797,500.
- What is the products contribution margin ratio? (Round to nearest whole percentage)
- What is the companys break-even point in units and in dollars for this product?
- What is the margin of safety, both in dollars and as a ratio? (Round to nearest whole percentage)
- If management wanted to increase its income from this product by 10%, how many additional units would have to be sold to reach this income level?
- If sales increase by 35,000 units and the cost behaviors do not change, how much will income increase on this product?
- What is the products contribution margin ratio? (Round to nearest whole percentage)
- What is the companys break-even point in units and in dollars for this product?
- What is the margin of safety, both in dollars and as a ratio? (Round to nearest whole percentage)
- If management wanted to increase its income from this product by 10%, how many additional units would have to be sold to reach this income level?
- If sales increase by 35,000 units and the cost behaviors do not change, how much will income increase on this product?
- Capstone, Inc. is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.50 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.35 per unit. Capstone, Inc. currently sells 525,000 sprinkler units at an average selling price of $35.00. The manufacturing costs are $6,850,000 variable and $2,050,140 fixed. Selling and administrative costs are $2,651,657 variable and $885,000 fixed.
- If Capstone, Inc. begins mass-producing its special-order sprinklers, how would this affect the company?
- If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler, what would be the effect on the company?
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