Current Attempt in Progress The company has a target net income of $$160,000.$ What is the required sales in dollars for the company to meet its

target?

Sales dollars required for target net income

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If the company meets its target net income number, by what percentage could its sales fall before it is operating at a

loss? That is$,$ what is its margin of safety ratio? $($Round answer to $2$ decimal places, e$.$g$.10\mathrm{.}5\%.$

Margin of safety ratio

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The company is considering a purchase of equipment that would reduce its direct labor costs by $$83,200$ and would

change its manufacturing overhead costs to $30\%$ variable and $70\%$ fixed $($assume total manufacturing overhead

cost is $$280,000,$ as above$).$ It is also considering switching to a pure commission basis for its sales staff. This would

change selling expenses to $90\%$ variable and $10\%$ fixed $($assume total selling expense is $$200,000,$ as above$).$

Compute $(1)$ the contribution margin and $(2)$ the contribution margin ratio, and recompute $(3)$ the break$-$even point

in sales dollars. $($Round contribution margin ratio to $2$ decimal places, e$.$g$.0\mathrm{.}55$ and all other

answers to $0$ decimal places, e$.$g$.2,520.$ Use the current year numbers for calculations.$)$

Contribution margin

Contribution margin ratio

Break$-$even point

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Blossom Corporation has collected the following information after its first year of sales. Sales were

$$1,200,000$ on $80,000$ units; selling expenses $$200,000(40\%$ variable and $60\%$ fixed$)$; direct materials $$408,800$;

direct labor $$232,000$; administrative expenses $$216,000(20\%$ variable and $80\%$ fixed$)$; and manufacturing overhead

$$280,000(70\%$ variable and $30\%$ fixed$).$ Top management has asked you to do a CVP analysis so that it can make plans

for the coming year. It has projected that unit sales will increase by $10\%$ next year.

Compute $(1)$ the contribution margin for the current year and the projected year, and $(2)$ the fixed costs for the

current year. $($Assume that fixed costs will remain the same in the projected year.$)$

$(1)$ Contribution margin for current year $

Contribution margin for projected year $

$(2)$ Fixed costs for current year

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Compute the break$-$even point in sales units and sales dollars for the first year. $($Round contribution margin

ratio to $1$ decimal place e$.$g$.0\mathrm{.}5$ and final answers to $0$ decimal places, e$.$g$.2,510.)$

Break$-$even point

units

Break$-$even point $

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