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(L.0. 1) The manager of Kima's Food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the
(L.0. 1) The manager of Kima's Food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of 40 percent. b. Find the break-even point in sales dollars with a contribution margin ratio of 25 percent. C. Find the sales dollars required to generate a profit of $200,000 for the year assuming a contri- bution margin ratio of 40 percent. 3-23. CVP Analysis-Ethical Issues Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a boy or girl friend, spouse, or other loved one. Top management will not approve this product in view of its high break-even point. Mark knows that if he can reduce the fixed costs in his proposal, then the break-even point will be reduced to a level that top management finds acceptable. Working with a friend in the company's finance department, Mark finds ways to credibly misstate the estimated fixed costs of producing DNA-diamonds below those that any objective person would estimate. Mark knows that if the product is successful (and he is certain that it will be), then top man- agement will not find out about the understatement of fixed costs. Mark believes that this product, once it is successful, will benefit the shareholders and employees of the company. Required Are Mark's actions ethical? Explain.
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