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Profitability Analysis Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120,000, and variable costs are 40 percent of

  1. Profitability Analysis Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120,000, and variable costs are 40 percent of sales revenue. Last year's revenues totaled $250,000. (a) Determine its break-even point in sales dollars. $ Answer (b) Determine last year's margin of safety in sales dollars. $ Answer (c) Determine the sales volume required for an annual profit of $80,000.
  2. Multiple Product Break-Even Analysis Presented is information for Stafford Company's three products.

A

B

C

Unit selling price

$7

$9

$7

Unit variable costs

(4)

(5)

(1)

Unit contribution margin

$3

$4

$6

With monthly fixed costs of $306,000, the company sells two units of A for each unit of B and three units of B for each unit of C. Determine the unit sales of product A at the monthly break-even point. Answer units

  1. Kopi Company produces dog cages that are sold for $45 per unit. The company produced and sold 5,000 dog cages during July 2017. There were no beginning or ending inventories. Variable and fixed costs follow.

Variable Costs per Unit

Fixed Costs per Month

Manufacturing:

Manufacturing overhead

$42,000

Direct materials

$10

Selling and administrative

18,000

Direct labor

2

Total

$60,000

Manufacturing overhead

5

$17

Selling and administrative

5

Total

$22

Required Prepare a contribution income statement for July.

Do not use any negative signs with your answers.

Kopi Company

Contribution Income Statement

For the Month of July 2017

Sales

Answer

Less variable costs

Direct materials

Answer

Direct labor

Answer

Manufacturing overhead

Answer

Selling and administrative

Answer

Answer

Contribution margin

Answer

Less fixed cost:

Manufacturing overhead

Answer

Selling and administrative

Answer

Answer

Profit

Answer

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