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Wesley Company manufactures and sells a single product. The company's Income statement at sales level of 3,000 units for last quarter follows: Sales Less: Variable
Wesley Company manufactures and sells a single product. The company's Income statement at sales level of 3,000 units for last quarter follows: Sales Less: Variable expenses Contribution margin Less Fixed expenses Net operating income Total $270,000 189,000 81,000 54,000 $ 27,000 Required: 1. What is the monthly break even point in units sold and in sales dollars? (Round your intermediate calculations and final answers to the nearest whole number.) Break-even Point Break even point in units sold Break-even point in sales dollars 2. Without resorting to computations calculate the total contribution margin at the break-even point for the quarter. Total contribution margin 3-a. How many units would have to be sold each quarter to earn a target profit of $99.900? Use the formula method. Units sold to attain target profit 3-b. Verify your answer by preparing a contribution format income statement at the target level of sales. Total Unit Sales 153.900 0 S 153,900 4. Refer to the original data. Compute the company's margin of safety for the quarter in units, in dollars and as a percentage of last quarter's sales, (Round "Percentage" answer to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).) Units Dollars Percentage Margin of safety % 5. What is the company's CM ratio? If quarterly sales decrease by $8,100 and there is no change in fixed expenses, what would you expect the quarter's net operating income to be? (Do not prepare an Income statement: use the CM ratio to compute your answer) CM ratio Net operating income
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