Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rahm Company produces a single product. The projected income statement for the coming year, based on sales of 160,000 units, is as follows: Sales $2,000,000

image text in transcribedimage text in transcribed

Rahm Company produces a single product. The projected income statement for the coming year, based on sales of 160,000 units, is as follows: Sales $2,000,000 Less: Variable costs 1,400,000 Contribution margin $600,000 Less: Fixed costs 450,000 Operating income $150,000 Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Round your answer for the unit contribution margin to two decimals, if necessary. Unit contribution margin Break-even units units Suppose that 10,000 units are sold above the break-even point. What is the profit? above break-even 2. Compute the contribution margin ratio and the break-even point in dollars. Round your answer for the contribution margin ratio to two decimals, if necessary. (Express as a decimal-based amount rather than a whole percent.) Contribution margin ratio Break-even sales Break-even sales Suppose that revenues are $87,500 greater than expected. What would the total profit be? $ 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level sales are 20 percent than expected. 5. How many units must be sold to earn a profit equal to 12 percent of sales? 200,000 units 6. Assume the income tax rate is 30 percent. How many units must be sold to earn an after-tax profit of $180,000? units

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_2

Step: 3

blur-text-image_3

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

Cost Accounting

Authors: M.E. Thukaram Rao

3rd Edition

8122433820, 978-8122433821

More Books

Students also viewed these Accounting questions