Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Projected costs for Ice Cream business: 13) Non-variable costs $40,000/month Variable cost/cone .30/cone Sales price $1.50/cone a. Compute the contribution margin per cone. (3Pts.) b.

image text in transcribed
image text in transcribed
Projected costs for Ice Cream business: 13) Non-variable costs $40,000/month Variable cost/cone .30/cone Sales price $1.50/cone a. Compute the contribution margin per cone. (3Pts.) b. Compute the contribution margin ratio. (3Pts.) c. Determine the number of cones that must be sold to break even each month. (3Pts.) Are you sure? Prove it by preparing a contribution margin income statement to see if Net Income equals zero. (3Pts.) d. e. Now compute the break-even point in dollars using the CM ratio. (3Pts.) Bad news: the rent is increasing and the sales people want more money. What if fixed costs increase to $50,000/month? What is the revised number of cones that must be sold to break even each month. (3Pts.) f. g. Prepare a contribution margin income statement to prove your answer in f. (3Pts.) How many cones must be sold to make a $10,000 profit monthly? Assume fixed costs are $50,000. (3Pts.) h. i. Compute Operating leverage using sales of $75,000/month. (3Pts.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Accounting Finance And Auditing For Lawyers

Authors: Lawrence Cunningham

6th Edition

0314280456, 978-0314280459

More Books

Students also viewed these Accounting questions

Question

What are the core functions of the universitys HRM department?

Answered: 1 week ago

Question

Identify a set of competencies for tenured faculty

Answered: 1 week ago