1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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

You might be interested in
At Tom's Automotive Repair, the mechanics rarely interacted directly with customers. Work orders were processed by the customer
sveta [45]

Answer:

employee empowerment

Explanation:

Employee empowerment refers to the authority given to the employees to take a certain decision on behalf of the organization. The employees are offered specific tasks in which they are assigned to initiate and take certain decisions. Such form of initiatives helps the employees to solve the problems and issues with responsibility. Also, this helps in the increase in productivity as the employees complete the given tasks with commitment and satisfaction altogether.

7 0
3 years ago
In microeconomics, what term refers to the measurement of responsiveness of the quantity demanded or the quantity supplied to a
Bess [88]
Hello!
The answer to your question is "price elasticity".
:)
5 0
3 years ago
The sale or transfer of goods ordinarily held for sale in course of business is goverend by the?
GenaCL600 [577]

The sale or transfer of goods ordinarily held for sale in course of business is governed by the  Uniform Commercial Code.

Whilst a shop lowers its charges via a sale, though, customers are more willing to buy due to the fact they recognize they're now not set as a whole lot of money on the line. extra often than not, customers who like the stuff they buy on sale will turn out to be coming lower back to shop for it once more, despite the fact that it's not priced at a reduction.

The important thing for a retailer is the gross income margin: the percentage of revenue left over from the sale of a product after subtracting the fee of that product – which includes the production, transport, packaging, and different work that goes into it.

A clearance is a unique sort of sale that could appeal to extra customers than traditional sales. this is due to the shop seeking to take away positive items for one cause or any other. the store is probably going out of business, the objects are going out of season, or there is not sufficient room in the shop for new gadgets.

Learn more about the sale here brainly.com/question/25586322

#SPJ4

7 0
1 year ago
The following data relate to direct labor costs for the current period:
mr Goodwill [35]

Answer:$2,125 unfavorable

Explanation:

Given

Standard costs     9,000 hours at $5.50

Actual costs        8,500 hours at $5.75

we have two formulas to calculate  for direct labor rate variance is:

1ST ----Direct Labor rate variance = (Actual Rate- Standard Rate ) x Actual hour

=( $5.75 -$5.50) x 8,500 =  $2,125 unfavorable

2ND----Direct Labor Rate Variance=Actual Direct Labor Cost Incurred - Standard Direct Labor Cost Based on Actual Hours

=Actual Hours x Actual Rate -Actual Hours x Standard Rate

= ($5.75 x 8,500 hours)-($5.50 x 8,500 hours)

$48,875 - $46,750 = $2,125 unfavorable

when the  actual rate is higher than the standard rate, the Direct Labor Rate Variance is unfavorable and if the actual rate is lower than standard rate, the variance is favorable.

3 0
3 years ago
Kingbird, Inc. receives a $11000, 9-month, 6% promissory note from Sunland Company in settlement of an open accounts receivable.
Scorpion4ik [409]

Answer and Explanation:

The journal entry at the time of receiving the note is as follows:

Note receivable Dr $11,000

         To Account receivable $11,000

(Being the note receivable is recorded)

Here the note receivable is debited as it increased the assets and credited the account receivable as it decreased the assets

6 0
3 years ago
Other questions:
  • (1) Cash balance per bank, July 31, $8,338.
    13·1 answer
  • Assume the following information:Selling price per unit $200Contribution margin ratio 50%Total fixed costs $275,000How many unit
    12·1 answer
  • Suppose you believe that basso inc.'s stock price is going to increase from its current level of $22.50 sometime during the next
    11·1 answer
  • When an activity threatens to harm the environment or society, policy makers should consider implementing?
    15·1 answer
  • Social regulation : A. is more concerned with the overall standard of living of society rather than with details of production p
    7·1 answer
  • A company can manufacture a product with off-the-shelf hand tools. Fixed manufacturing costs are $1200 for tools and $1.60 manuf
    14·1 answer
  • Currently, Warren Industries can sell 20 dash year​, ​$1 comma 000​-par-value bonds paying annual interest at a 9​% coupon rate.
    11·1 answer
  • Jerome has insignificant influence of Melina Corporation because it owns less than 20% of the voting stock. The cost of the Meli
    11·1 answer
  • Which points are most efficient for the utilization of resources on a production possibilities diagram?
    15·1 answer
  • Which individuals helped pioneer administrative management theory?
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!