Earth Problem Alture Problem Make sure you fill in all Yellow cells. Yellow cells left blank will receive zero credit. Exercise F: Never Late Delivery currently delivers packages for $9 each. The variable cost is $3 por package, and fixed costs are $60,000 per month 79 points Compute the break-even point in BOTH sales dollars and units under cach of the following independent assumptions. 1. The costs and selling price are as given above. 2. Fixed costs are increased to $75,000 3. Selling price is increased by 10%. (Fixed costs are $60,000.) 4. Variable cost is increased to 5430 per unit. (Fixed costs are $60,000 and selling price is $9.) 5. Calculate the margin of safety for each option assuming sales were $140,000 6. Comment which option would be the best and why Exercise F Assumption 1: Compute break even point in BOTH sales dollars and units with selling price - 59, variable costs - $3, and fixed costs -- 560,000 per month Step 1: To compute the BE in Units we first have to compute the Contribution Margin (CM) per Uni Contribution margin per unit sales price / unit variable cost/ unit per unit Breakeven in Units units Fixed Costs CM per unit Step 2: To compute the BE in Sales Dollars we first have to compute the Contribution Margin (CM) Ratio CM ratio CM Sales (DO NOT ROUND or you will not get the correct answer for BE Sales reakeven in Sales Dollar Ford Costs CM ratio OR Breakeven in Sales Dollars Sales price/unit Breakeven in units Chart Lancis Problema Alternate Problem 2. Fixed costs increased to $75,000 Assumption 2. Compute break even point in BOTH sales dollars and units with selling price 59, variable costs - $3, and fixed costs - S75.000 per month Step 1: To compute the BE in Units we first have to compute the Contribution Margin (CM) per Uni sales price/ unit variable cost/ unit Contribution marpin per unit Breakeven in Units Fred Costs CM per unit units Step 2: To compute the BE in Sales Dollars we first have to compute the Contribution Margin (CM) Ratio CM ratio CM Sales {DO NOT ROUND at you will not get the correct answer for Breakeven in Sales Dollars Fixed Costs CM ratio OR Breakeven in Sales Dollars Sales price/unit Breakeven in units 3. Selling price increased by 10%. Assumption 3: Compute break even point in BOTH sales dollars and units with selling price $??? variable costs - $3, and fixed costs=560,000 per month Step 1: Compare the new selling price. New Selling price Old selling price Increase Selling price increase per unit per unit Old selling price Selling price increase NE Belling ice per unit per unit Step 2: To compute the RE in Units we first have to compute the Contribution Margin (CM) per Un Contribution margin per unit sales price / unit variable cost / unit per un Breakeven in Units units (Round to nearest cent - 2 decimal places) Fred Costs CM per unit Step 3: To compute the BE in Sales Dollars we first have to compute the Contribution Margin (CM) Ratio CM ratio (DO NOT ROUND or you will not get the correct answer for Be Sale Sales freakeven in Sales Dollar Fed Costs CM ratio Round to nearest cent-2 decimal places) OR These will be a few cents different due to rounding Breakeven in Sales Dollars Sales price/unit Breakeven in uns (Round to nearest cent-2 decimal places) 4. Variable costs increase to $4.50 per unit Assumption : Compute break even point in BOTH sales dollars and units with selling price 39. variable costs - 54.50, and fixed costs - S60,000 per month Step 1: To compute the BE in Units we first have to compute the Contribution Margin (CM) per Uni Contribution marin per unit sales price / unit variable cost/ unit per unit Breakeven in Units Fed Costs CM per unit units (Round to nearest cent-2 decimal places) Step 2: To compute the BE in Sales Dollars we first have to compute the Contribution Margin (CM) Ratio CM ratio CM Sales (DO NOT ROUND or you Breakeven in Sales Dollars Fixed Costs CM ratio OR These will be a few cents different due to rounding Breakeven in Sales Dollars Sales price/unit Breakeven in units 5. Calculate margin of safety for each option if sales are $140,000 Assumption 5: Calculate the margin of safety for each assumption above (1-4) if sales are $140,000, Margin of Safety Current Sales Breakeven Sales Dollars Option 1 Option 2 Option 3 Option 4 ??? 6. Comment which option would be the best and why
