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dimaraw [331]
3 years ago
5

The following data are for Lily Kay Company. Total sales revenue $250,000 Number of units sold 50,000 units Contribution margin

per unit $3.50 Fixed costs $100,000 Calculate the number of units that must be sold to generate net income of $80,000.
a. 120,000 units
b. 51,429 units
c. 22,857 units
d. 5,714 units
e. 13,333 units
Business
1 answer:
eduard3 years ago
3 0

Answer:

b. 51,429 units

Explanation:

If x = Number of units

Net Income = Sales Revenue - Variable Cost - Fixed Cost

or

Net Income = Contribution Margin - Fixed Cost

where,

Net Income = $80,000

Contribution Margin per unit = $3.50

Fixed Cost = $100,000

Contribution Margin = Net Income + Fixed Cost

$3.50x = $80,000 + $100,000

$3.50x = $180,000

Dividing the above equation by $3.50 we get

x = $180,000 / $3.50

x = 51,429 units

Hence 51,429 number of units must be sold to generate the net income of $80,000.

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Answer:

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5. Cash ($8,000)                                                Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

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Total liabilities = $12,000

Stockholders' equity = $16,000

Balance Sheet as of December 31, Year 1

Assets:

Cash                     $8,000

Land                  $20,000

Total assets      $28,000

Liabilities:

Bank loan         $12,000

Equity:

Common stock $7,000

R/Earnings          9,000

Total equity    $16,000

Liabilities and

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c. Total assets = $28,000

Total liabilities = $12,000

Total equity = $16,000

d. The Land will be shown on the December 31, Year balance sheet at $20,000.  The reason is that this is the acquisition cost and the land is not held for trading (no information provided).

Explanation:

a) Data and Analysis based on the Accounting Equation:

1. Cash $7,000 Common stock $7,000

2. Cash $12,000 Bank loan payable $12,000

3. Cash $47,000 Service Revenue $47,000

4. Cash ($30,000) Operating expenses ($30,000)

5. Cash ($8,000) Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

7 0
2 years ago
Lyle’s manager just handed him a list of goals for the year. Because Lyle had no say in setting these goals, he isn’t sure that
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GrogVix [38]

Answer:

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