Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Drives - n - More Manufactures 1GB flash drives (jump drives). Price and cost data for a relevant range extending to 200,000 units per month
Drives - n - More Manufactures 1GB flash drives (jump drives). Price and cost data for a relevant range extending to 200,000 units per month are as follows: (Click the icon to view the data.) Ignore requirements 2,3,9&10 0,000 units pe Requirements 1. What is the company's contribution margin per unit? Contribution margin percentage? Total contribution margin? 2. What would the company's monthly operating income be if the company sold 170,000 units? 3. What would the company's monthly operating income be if the company had sales of $4,500,000 ? 4. What is the breakeven point in units? In sales dollars? 5. How many units would the company have to sell to earn a target monthly profit of $269,500 ? 6. Management is currently in contract negotiations with the labor union. If the negotiations fail, direct labor costs will increase by 10%, and fixed costs will increase by $24,000 per month. If these costs increase, how many units will the company have to sell each month to break even? 7. Return to the original data for this question and the rest of the questions. What is the company's current operating leverage factor (round to two decimals)? 8. If sales volume increases by 8%, by what percentage will operating income increase? 9. What is the firm's current margin of safety in sales dollars? What is its margin of safety as a percentage of sales? 10. Say Drives - n-More adds a second line of flash drives ( 2GB rather than 1GB ). A package of the 2GB flash drives will sell for $50 and have variable cost per unit of $22 per unit. The expected sales mix is six of the smaller flash drives (1 GB) for every one large flash drive ( 2GB ). Given this sales mix, how many of each type of flash drive will Drives - n - More need to sell to reach its target monthly profit of $269,500 ? Is this volume higher or lower than previously needed (in Question 5) to achieve the same target profit? Why? Requirement 1. What is the company's contribution margin per unit? The contribution margin per unit is $ What is the company's contribution margin ratio? The contribution margin ratio is %. What is the company's total contribution margin? The total contribution margin is $ Requirement 4. What is the breakeven point in units? The company's breakeven point is units. What is the breakeven point in sales dollars? The breakeven point in dollars is $ What is the breakeven point in sales dollars'? The breakeven point in dollars is $ Requirement 5. How many units would the company have to sell to earn a target monthly profit of $269,500 ? In order to earn a monthly profit of $269,500, the company must sell units. Requirement 6. Management is currently in contract negotiations with the labor union. If the negotiations fail, direct labor costs will increase by 10%, and fixed costs will increase by $24,000 per month. If these costs increase, how many units will the company have to sell each month to break even? (Round your answer up to the nearest whole number.) The new breakeven point is units. Requirement 7. Return to the original data for this question and the rest of the questions. What is the company's current operating leverage factor (round to two decimals)? The operating leverage factor is Requirement 8 . If sales volume increases by 8%, by what percentage will operating income increase? (Round the percentage to one decimal place.) The operating income will increase by %
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