Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales $20,300 Food and packaging $5,677 5,100 Payroll Occupancy (rent, depreciation, etc.) General, selling, and administrative expenses 5,913 3,000 $19,690 Income from operations $610 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) million b. What is Wicker Company's contribution margin ratio? Round to one decimal place. % C. How much would income from operations increase if same-store sales increased by $1,200 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million $ Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales Cost of goods sold $5,328,000 $1,332,000 370,000 Selling, general and administration $1,702,000 Income from operations $ 3,626,000* *Before special items In addition, assume that BeerBev sold 37,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $15,500. When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place. a. Compute the break-even number of barrels for the current year. barrels b. Compute the anticipated break-even number of barrels for the following year. barrels Break-even analysis for a service company Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $53,200. Costs and expenses for the year were as follows: Cost of revenue $25,500 Selling, general, and administrative expenses 14,400 5,900 Depreciation Assume that 70% of the cost of revenue and 20% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number. accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar. per account Margin of Safety a. If Canace Company, with a break-even point at $370,000 of sales, has actual sales of $500,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2. % b. If the margin of safety for Canace Company was 45%, fixed costs were $1,923,075, and variable costs were 55% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)
