Question
Contribution Margin Ratio, Break-Even Sales Revenue, Sales Revenue for Target Profit Schylar Pharmaceuticals, Inc., plans to sell 120,000 units of antibiotic at an average price
Contribution Margin Ratio, Break-Even Sales Revenue, Sales Revenue for Target Profit
Schylar Pharmaceuticals, Inc., plans to sell 120,000 units of antibiotic at an average price of $21 each in the coming year. Total variable costs equal $856,800. Total fixed costs equal $7,100,000.
Required:
1. What is the contribution margin per unit? Round your answer to the nearest cent. $fill in the blank 1
What is the contribution margin ratio? Round your answer to two decimal places. (Express as a decimal-based answer rather than a whole percent amount.) fill in the blank 2
2. Calculate the sales revenue needed to break even. Round your answer to the nearest dollar. $fill in the blank 3
3. Calculate the sales revenue needed to achieve a target profit of $220,000. Round your answer to the nearest dollar. $fill in the blank 4
4. What if the average price per unit increased to $22.50? Recalculate the following:
a. Contribution margin per unit. Round your answer to the nearest cent. $fill in the blank 5
b. Contribution margin ratio. Enter your answer as a decimal value (not a percentage), rounded to four decimal places. fill in the blank 6
c. Sales revenue needed to break even. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar. $fill in the blank 7
d. Sales revenue needed to achieve a target profit of $220,000. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar. $fill in the blank 8
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started