Dream Foot buys hiking socks for $5 a pair and sells them for $10. Management budgets monthly fixed expenses of $25,000 for sales volumes between
Dream Foot buys hiking socks for $5 a pair and sells them for $10. Management budgets monthly fixed expenses of $25,000 for sales volumes between 0 and 12,000 pairs. Requirements 1. Use the income statement approach and the shortcut unit contribution margin approach to calculate monthly breakeven sales in units. 2. Use the shortcut contribution margin ratio approach to compute the breakeven point in sales revenue (sales dollars) 3. Calculate the monthly sales level (in units) required to earn a target operating income of $11,000. Use either the income statement approach or the shortcut contribution margin approach. 4. Prepare a graph of Dream Foot's CVP relationships. Draw the sales revenue line, the fixed expense line, and the total expense line. Label the axes, the breakeven point, the operating income area, and the operating loss area. Requirement 1. Use the income statement approach and the shortcut unit contribution margin approach to calculate monthly breakeven sales in units. Let's begin by using the income statement approach to compute monthly breakeven sales in units. Select the basic income statement equation. Operating income I Islam the hania in mined shaun ashia Ins tha mummhasDream Foot buys hiking socks for $5 a pair and sells them for $10. Management budgets monthly fixed expenses of Requirement 1. Use the income statement approach and the shortcut unit contribution margin approach to calculate monthly breakeven sales in units. Let's begin by using the income statement approach to compute monthly breakeven sales in units. Select the basic income statement equation. = Operating income Using the basic income statement equation you determined above, solve for the number of units to breakeven. The number of units needed monthly to breakeven is Now identify the formula to calculate the monthly breakeven sales in units using the shortcut unit contribution margin approach. Sales in units The number of units needed monthly to breakeven is Requirement 2. Use the shortcut contribution margin ratio approach to compute the breakeven point in sales revenue NextRequirement 2. Use the shortcut contribution margin ratio approach to compute the breakeven point in sales revenue (sales dollars). Begin by identifying the general formula to compute the breakeven sales in dollars. Sales in dollars Dream Foot will have to generate of sales revenue to breakeven. Requirement 3. Calculate the monthly sales level (in units) required to earn a target operating income of $11,000. Use either the income statement approach or the shortcut contribution margin approach. Dream Foot will have to sell units monthly to earn a target operating income of $11,000. (After you hit continue, the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) Requirement 4. Prepare a graph of Dream Foot's CVP relationships. Draw the sales revenue line, the fixed expense line, and the total expense line. Label the axes, the breakeven point, the operating income area, and the operating loss area. Draw a graph of Dream Foot's CVP relationships. Include the following: three separate lines for sales revenue, fixed Next 6 J Q tv 4Requirement 4. Prepare a graph of Dream Foot's CVP relationships. Draw the sales revenue line, the fixed expense area. line, and the total expense line. Label the axes, the breakeven point, the operating income area, and the operating loss Draw a graph of Dream Foot's CVP relationships. Include the following: three separate lines for sales revenue, fixed expense, and total expense and plot the breakeven point. Be sure to label each item drawn on the graph. (Enlarge the graph and use the line tool and point tool buttons displayed to draw the graph.) 90,000- 80.000- 70.000- 60.000- 50.000- Dollars 40,000- 30.000- 20,000- 10,000- 0.00100706004014-4009040040000 Units Click to enlarge Next 6 tv NTODA U80,000- 70,000- 60,000- 50,000- Dollars 40,000- 30.000- 20,000- 10.000 Units above the fixed expense line and below the total expense line above the sales revenue line and below the total expense line The final step in our graph is to on the graph that you previously prepared. I aled for income and loss. (Enlarge each graph above the total expense line and below the sales revenue line The operating income area is The operating loss area is
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