Question 1
Fill in the missing amounts in each of the following eight case situations. near each case independently (Hint: One wayto nd the missing amounts would be to prepare a contribution margin income statement for each case, enter the known data, and then compute the missing items.) a. Assume that only one product is being sold in each of the following four case situations: {Negative amounts should be indicated by a minus sign. Enter your contribution margin answers as per unit dollar values. Enter your answers rounded to the nearest whole numberJ 13mm s 1ssnnn_ s 53.11110 122 4110 ms per unit _26,5EIU 351mm $3? per unit 1-113 mm (111 01111} b. Assume that more than one product is being sold in each ofthe following four case situations: [Negative amounts should be indicated by a minus signJ _ mm mime 121-1111 _u 136 nun 211mm 1-d. Compute the degree of operating leverage at the level of sales that you computed in Requirement [1c]. '2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3 per skateboard next year. If this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new breakeven point in skateboards? [Do not round intermediate calculations]: Unit sales to breakeven point - skateboards 3. Refer to the data in Requirement {2} above- If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $120.0DD. as in the most recent year? [Do not round intermediate calculations.) 4. Refer again to the data in Requirement [2] above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as iasryear, what selling price per skateboard must it charge next year to cover the increased labour costs\":I {Do not round intermediate calculations. Round your answer to 2 decimal places} :| \fTyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales $ 1,533,333 1Variable expenses 933,333 Contribution margin 533,333 Fixed expenses 483,333 Net operating income $ 123,303 Management is anxious to maintain and perhaps even improve its present level ofincome from the skateboards. Required: 1-a. The company's breakeven point for the most recent year was 32,000 units. Compute the CM per skateboard. 1-b. l[Iompute the selling price and variable expenses per skateboard. {Do not round intermediate calculations. Round your answers to 2 decimal places.} Selling price _ per skateboard Variable expense _ per skateboard 1-c. Compute the number of skateboards sold in the most recent year. {Do not round intermediate calculations.} 5. Refer to the original data. The company is considering the construction of a new. automated plant The new plant would result in the contribution margin per unit increasing by 60%, but it would cause xed costs to increase by 96%. If the new plant is built, what would be the company's new CM ratio and new breakeven point in skateboards? [Do not round intermediate calculations} scum-mowers -_ Unit sales to breakeven point - skateboards 6. Refer to the data in Requirement {5} above. a. lfthe new plant is built, how many skateboards will have to be sold next year to earn the same net operating income, $120,G, as last year? {Do not round intermediate calculations.} b-1. Assume that the new plant is constructed and that next year the company manufactures and sells the same number of skateboards as sold in the most recent year. Prepare a contribution format income statement. {Do not round intermediate calculations]
