Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. (1) Calculate the breakeven point in units and sales dollars. (2) Prepare a contribution margin income statement to support your results. (3) Calculate the number of units and sales revenue required to earn profit of $75,000. (4) What is the margin of safety between the company earning a $75,000 profit and (5) What would happen to the breakeven point if variable costs were reduced by $10 / unit? (6) What would happen to the breakeven point if fixed costs increased $40,000? (7) What is the operating leverage facol for Ritchie Mfg Co? (8) What would happen to the $75,000 net income if sales in units declined 7%? Prove it using a controbution margin income statement
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started