Question
Sales Director, Britney Lipa is excited to share with you the most recent accounting numbers forStronger Inc's sales and cost for producing their new line
Sales Director, Britney Lipa is excited to share with you the most recent accounting numbers for"Stronger" Inc's sales and cost for producing their new line of popular high-fidelity systems for celebrity private jets:
December (2021)
Total sales of high fidelity systems $43,560
Less:
Purchase price paid -17,000
Additional labour and supplies-1,400
Commissions-1,250
Contribution margin 23,910
Less:
Fixed warehouse cost-680
Fixed administrative cost-4,300
Fixed selling cost-5,600
Research and Development-9750
Operating Income$3580
December (2020)
Total sales of high fidelity systems $41,700
Less:
Purchase price paid -16,000
Additional labour and supplies-1,200
Commissions-1,100
Contribution margin23,400
Less:
Fixed warehouse cost-500
Fixed administrative cost-4,300
Fixed selling cost-5,000
Research and Development-4,000
Operating Income$9,600
SOLVE and ANALYZE:
1a) Britney would like you to calculate the contribution margin ratio for both December for 2021 and 2020 and the 1b) BEP in sales dollars and margin of safety for years./15 marks
2) Share with Britney Lipa what you found in analyzing the differences between Dec 2021 and 2020 based on your calculations and give her some managerial accounting recommendations on how to make her company even stronger in the next 1-5 years. /10 marks
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