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VladimirAG [237]
2 years ago
6

Whoosh Calendars imprints calendars with college names. The company has fixed expenses of $1,095,000 each month plus variable ex

penses of $6.50 per carton of calendars. Of the variable expenses, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $16.50.
Requirement:
1. Compute the number of cartons of calendars that Fast Spirit Calendars must sell each month to breakeven. 
2. Compute the dollar amount of monthly sales Fast Spirit Calendars needs in order to earn $312,000 in operating income.
3. Prepare the​ company's contribution margin income statement for June for sales of 455,000 cartons of calendars. 
4. What is​ June's margin of safety​ (in dollars)? What is the operating leverage factor at this level of​ sales?
5. By what percentage will operating income change if​ July's sales volume is 11​% ​higher?
Original volume (cartons)Add: Increase in volumeNew volume (cartons)Multiplied by: Unit contribution marginNew total contribution marginLess: Fixed expensesNew operating incomevs. Operating income before change in volumeIncrease in operating income Percentage change
Business
1 answer:
tiny-mole [99]2 years ago
4 0

The number of cartons of calendars that Fast Spirit Calendars must sell each month to breakeven is 109500.

<h3>Breakeven</h3>

1. Number of cartons

Number of cartons=fixed expenses/contribution margin per carton

Number of cartons=1095000/(16.5-6.5)

Number of cartons=109500

2.  Target sales in dollars

Contribution margin ratio=contribution margin per carton/sales price per carton =

Contribution margin ratio=(16.5-6.5)/16.5

Contribution margin ratio=.61

Target sales in dollars=(fixed expenses + target operating income)/ contribution margin ratio

Target sales in dollars=(1095000+312000)/.61

Target sales in dollars=2,306,557

3. Contribution margin income statement

Sales revenue 7,507,500

(16.50x455,000)

Cost of goods sold 5,105,100

(6.50x455,000x68%)

Operating expenses 2,402,400

(6.50x455,000x32%)

Contribution margin  4,550,000

[(16.5-6.5)×455,000]

Fixed expenses 1095000

Operating income 3,455,000

(4,550,000-1,095,000)

4. Margin of safety​ (in dollars)

Sales revenue - sales revenue at breakeven = margin of safety ( in dollars) - ( sales price per carton x breakeven cartons) = margin safety in dollars

Margin safety in dollars=7,507,500-(16.5x109500)

Margin safety in dollars=7,507,500-1,806,750

Margin safety in dollars=5,700,750

Operating leverage factor =Contribution margin/operating income

Operating leverage factor =4,550,000/3,455,000

Operating leverage factor =1.316

Operating leverage factor =1.32 (Approximately)

5.  Operating income

Operating income increase=Sales volume x operating leverage factor

Operating income increase=11%x1.32

Operating income increase=.1452

New volume=Original volume + increase in volume

{[455,000+45,500 x(16.5-6.5)]-1095000}-3,455,000

=[500,500x10)-1095000]-3,455,000

=(5,005,000-1095000)-3,455,000

=3,910,000-3,455,000

=455,000

455,000/3,455,000

=0.132

Inconclusion the number of cartons of calendars that Fast Spirit Calendars must sell each month to breakeven is 109500.

Learn more about breakeven here:brainly.com/question/21137380

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vesna_86 [32]

Answer:

Net income= -$34,200

Explanation:

Giving the following information:

Beta Division:

Sales= $580,000

Variable expenses= $301,600

Traceable fixed expenses of $186,500.

Income= 91,900

Alpha Division:

Sales of $510,000

Variable expenses of $178,500

Traceable fixed expenses of $222,100.

Income= 109,400

The total amount of common fixed expenses not traceable to the individual divisions is $235,500.

<u>We need to deduct from the income of each division the not traceable fixed costs.</u>

Net income= 91,900 + 109,400 - 235,500

Net income= -$34,200

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Love Company’s accounting records show an after-closing balance of $42,100 in its Retained Earnings account on December 31, 2018
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Answer and Explanation:

  • Closing Balance (Retained earning ) of 31 Dec 2018 is called Opening Balance of 1 Jan 2019 , i.e. $42,100
  • There is no particular information provide for 1 Jan 2018 .So, assume there is Zero balance of retained Earning
  • Calculation of retained earning of 31 Dec 2017

Retained earning                             $42,100

Less: revenue during the year        $19,400

Add: Expenses During the year      $9,800

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The following transactions occurred during a recent year:
Natasha_Volkova [10]

The Company's preliminary Net Income can be determined as $575.

Preliminary net income = Total Revenue - Total Expenses

= $575 ($4,230 - $3,655)

Revenue:

d. Sales Revenue      $680

f. Service Revenue $2,870

i. Service Revenue    $680

Total Revenue      $4,230

Expenses:

a. Wages Expense       $1,700

e. Utilities Expense     $1,360

h. Travel Expense           $115

k. Advertising Expense $480

Total Expenses         $3,655

Thus, the company generated a preliminary net income of $575 for the period.

Learn more about determining net income at brainly.com/question/19850768

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