Chapter 11 Portfolio Problem

Name: __________________ 21-22

1. Contribution Margin is the excess of sales over _________________

1. Break-Even point is when _________________________________________.
2. Break-Even Sales:

Currently, the unit selling price of Lego Duplo My First Number Train at Walmart is $20.00, the unitvariable costis $ 11.00, and the totalfixed costsare $55,800. A proposal is being evaluated to increase the unit selling price to $ 21.00. Show your work.

1. Compute the current break-even sales (units) for the selling price of $20.00.

1. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to $21.00, and all costs remain constant.

1. When sales price increases the break-even units ( increase / decrease ).

3. Break-Even Sales and sales to realize target profit or operating income

Juan Inc. expects fixed costs to be $ 796,680, a unit variable cost of $120, and a unit selling price of $300. Show your work.

1. Compute the break-even sales in units.

1. Compute sales in units required to realize operating income of $480,000.

Hint: this unit number needs to be higher than a. See page 474 in text for the formula AND you can not sell a partial unit (always round UP!)

4. Contribution margin ratio

If sales are $48,500, variable costs are $30,070, and fixed costs are $6,000. Compute the contribution margin ratio. Show your work.

5. Mixed costs are costs that have _________________________________?