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1. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. assume company is selling at the moment 8000 lantern. Required: Compute the companys Margin of Safety in sales dollar

2. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month.

Required: Compute the companys break-even point in number of lanterns

3. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month.

Required: Compute the companys Margin of Safety in percentage. (write without % sign) eg 40 for 40%, or 62.5 for 62.5%

4. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month.

Required: Compute the companys break-even point in total sales dollars.

5. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. If proposed changes by sales manager implementted, then How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?

6. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month.

Calculate Profit, if proposed changes by sales manager being implemented

7. Raveen Products sells camping equipment. One of the companys products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. At present, the company is selling 8,000 lanterns per month.

Calculate Net Income for Present Setting.

Problem Break-Even and Target Profit Analysis Reveen Products sells camping equipment. One of the company's products. a camp lantern. Sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135.000 per month. Required: 1. Compute the company's break-even point in number of lanterns and in total sales dollars. 2. If the variable expense per lantern increase a percentage of the selling price, will it result in a higher or a lower of break-even point? Why? (Assume that the fixed expenses remain unchanged.) 3. At present the company is selling 8,000 lanterns perm on the. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements. one under present operating conditions, and one a, operations would appear after the proposed changes. Show both total and per unit data on your statements, 4. Refer to the data in (3)1 above, How man, lanterns would have to be sold at the new selling a price to yield a minimum net operating income of $72.000 per month? Step 1 of 4 A 1) The break-even point in units sold can be calculated as: Unit sales to break even = Fixed expenses Unit contribution margin $135,000 $27 Per unit Unit sales to break even=5,000 units To get break-even in dollars, multiply the break-even in units by the selling price: = 5000 x $90 per unit = $450,000 Comment Step 2 of 4 A 2) If variable expenses increase as a percentage of sales, a higher break-even point will be needed. The higher variable expenses as a percentage of sales, the lower contribution margin is as a percentage of sales. The company would have to sell more units to increase contribution margin to the point it covers fixed costs. Step 3 of 4 A 3) Present Contribution Format Income Statement Total Per Unit Sales $720,000 $90 Variable expenses 504,000 63 Contribution margin 216,000 $27 Fixed expenses 135.000 Net operating income $ 81,000 Under the proposed changes, unit sales will increase by a total of 25%. = 8,000 x 1.25 = 10,000 units There shall also be a 10% reduction in the selling price: = $90 x 0.9 = $81 Proposed Contribution Format Income Statement Total Per Unit Sales (10,000 units X$81/unit) $810,000 $81 Variable expenses 630,000 63 Contribution margin 180,000 $18 Fixed expenses 135.000 Net operating income $ 45,000 The increase in units is not enough to cover the decrease in selling price, so income reduces by $45,000. Step 4 of 4 A 4) To obtain the target profit, use this formula: Unit sales to attain target profit = Target profit + Fixed expenses Unit contribution margin $72,000+ $135,000 $18/ unit Unit sales to attain target profit=11,500 unit Comment