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3 years ago

Billings Company has the following information available for September 2017.

Business

1 answer:

kumpel [21]3 years ago

7 0

Answer:

Part a

Contribution Margin = 29.95% (2 d.p)

Part b

Billing Company

CVP Income for as at September 2017

Total Per Unit

$ $

Sales 295704 444

Less Variable Costs (138084) (311)

Contribution 157620 133

Fixed Costs (59850) 89.86

Net Income 97770 43.14

Part c

Billing`s break even point is 450 units

Part d

Billing Company

CVP Income for as at September 2017 - Break Even Point

Total Per Unit

$ $

Sales 199800 444

Less Variable Costs (139950) (311)

Contribution 59850 133

Fixed Costs (59850) 133

Net Income 0 0

Explanation:

Part a

Contribution Margin = Contribution/Sales × 100

Therefore contribution margin is ($444-$311)/$444 * 100 = 29.95% (2 d.p)

Part b

Sales - Variable Cost = Contribution

Net Income = Contribution - Total Fixed Costs

Part c

Break Even Point is when Billings neither makers a profit or loss.

Break Even Point ( Units) = Total Fixed Cost/Contribution per unit

Therefore Break Even Point (Units) = $59850/$133 = 450 units

Part d

The total and unit CVP should neither reflect a profit or loss at a capacity of 450 units as this is the break even point. In this case profit = nill

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