Magnolia Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.(a) Calculate break-even in units.(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.(d) Calculate dollar sales that would be needed to generate the same profit as above.(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.Be sure to label each calculation and show all calculations.
What will be an ideal response?
(a) $399,500/($350 - 180) = 2,350 units
(b) $399,500/(($350 - 180)/$350) = $822,524 or $822,500.
(c) $399,500 + ($420,000/(1 - .3)) = ($399,500 + $600,000)/$170 = 5,880 units
(d) ($399,500 + $600,000)/.4857 = $2,057,855 or $2,058,000 or (5,880 BE units ? $350 = $2,058,000)
(e) $910,000 - $822,500 = $87,500/$822,500 = 10.6%
You might also like to view...
The Safety Committee, a temporary team at the Annapolis Tool & Die Corporation, was established to make the factory floor a safer place. Members of the committee still work in their departments full-time, but they meet twice a month for a few hours as a committee. The Safety Committee is an example of a ____ within an organization.
A. vertical design B. modular design C. multipurpose design D. common purpose E. horizontal design
Consumer psychographics are easy to quantify, less complex than demographics, and open to less interpretation about consumer attitudes, values, and lifestyles
Indicate whether the statement is true or false
Bill Simon says, "We should get rid of the FASB and SEC since free market forces will make sure that companies report reliable information.". Do you agree? Why or why not?
Costs that might be incurred by service, merchandising, and manufacturing companies are described below:Sales commissions paid to sales associates in a department store Shipping cost for Amazon Electricity cost to heat and light a law firm Rent on a storeroom used by Turf Pros to store lawn equipment Salary of a supervisor in a Best Buy distribution center Wages paid to production workers in a General Motors plant Insurance on a Hershey factory Fuel costs for Southwest Airlines Depreciation of office equipment by Microsoft Corporation Dishwashing in an Olive Garden restaurant Salary of the CEO of Microsoft Lubricants used to maintain machinery in a textile factory Cost of metal cans used in a dog food factory Cost of pizza boxes for
Domino's Pizza Material handling costs for Frito Lay Required:Classify each cost as variable (V) or fixed (F) with respect to volume or level of activity. What will be an ideal response?