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
The process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods
Setler79 [48]

Answer:

A) true

Explanation:

Compound interest can be regarded as

adding of interest gotten to the principal sum of a deposit or the principal sum of a loan. It's one that is gotten after reinvesting of ones interest instead of paying it out, as a result of this the interest that comes in

next period will be earned on the principal sum along with those interests accumulated before. It should be noted the process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods.

6 0
3 years ago
The SBA is a source of assistance that provides small businesses with the following
Colt1911 [192]

Answer:

  • government contracting
  • advocacy
  • entrepreneurial development
  • access to capital

Explanation:

SBA is a US government agency whose core mandate is to support the growth of small businesses. The Small Business Association(SBA),  promotes economic growth by providing useful resources and information to help them start and develop small businesses.

The  SBA supports the advancement of small businesses in the following ways.

  1. Education and training,
  2. Providing information and links to affordable credit
  3. Connecting to government contracts
  4. Offering business advise
7 0
3 years ago
NEED HELP ASAP THANK YOU
solniwko [45]

Answer:

a

Explanation:

5 0
3 years ago
It is always desirable to have a higher compounding frequency, regardless of the initial investment or the time horizon. True Fa
Katena32 [7]

Answer:

The answer is given below

Explanation:

Compounding frequency is the number of times the interest is paid in a year. A higher compounding frequency for a investment with the same initial investment and time horizon would produce more interest and profit as compared to that with a lower compounding frequency. But for a smaller initial investment or less time horizon of higher compounding frequency as compared to larger initial investment or more time horizon of lower compounding frequency, that of the lower compounding frequency is more desirable because it would produce more interest.

5 0
3 years ago
To maintain production, the quality of materials must be high because no buffer inventories are available to take up the slack.
Sophie [7]

Answer:

Just in time (JIT) inventory management

Explanation:

Just in time (JIT) inventory management is a system created to lower inventory costs and increase manufacturing efficiency. JIT aligns materials and components orders with production schedules in order to reduce inventory levels to the lowest possible level.

It was developed by Toyota in order to reduce the costs of its car manufacturing processes. Once I visited a Toyota pickup factory and it was amazing to see that the whole inventory of finished engines was 4 units, and the factory produced more than 500 pickups per day.

3 0
3 years ago
Other questions:
  • If a corporate bond with face value of $1,000 has an interest rate of seven percent paid once a year for a term of 10 years, wha
    6·1 answer
  • Assume that potential projects X, Y and Z will each pay a total of $100,000 over 20 years. X pays $8,000 per year for 10 years a
    11·1 answer
  • Perry Partnership distributed cash of $15,000 and a parcel of land in a liquidating distribution to Gupta, a partner. The land h
    5·1 answer
  • "A potential client is 81 years old and has asked his representative for recommendations of speculative "Dot Com" stocks. The cu
    9·1 answer
  • Jack broke into the Acme Liquor Store. He took $600 in cash. The police arrested him and he was convicted for this crime. The pe
    11·1 answer
  • You are the CEO of an American company with worldwide​ name-brand recognition. For the first time in your​ 100-year history, you
    11·1 answer
  • Uniform Supply accepted a $6,300, 90-day, 8% note from Tracy Janitorial on October 17. If the note is dishonored, but Uniform Su
    5·1 answer
  • John Deere is a manufacturer of agriculture equipment. Deere supplies replacement parts to dealerships across the globe. John De
    14·1 answer
  • a lawnmower manufacturer has the following loss distribution for its annual products liability costs: loss probability 250,000 0
    10·1 answer
  • Pablo Company has budgeted production for next year as follows: Quarter First Second Third FourthProduction in units 59,000 99,0
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!