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Arada [10]
3 years ago
8

In the month of June, Bedford Company sold 350 widgets. The average sales price was $34. During the month, fixed costs were $6,3

20 and variable costs were 40% of sales. Instructions:A. Determine the contribution margin in dollars, per unit, and as a ratio.B. Compute the break-even point in units and dollars.C. How much can sales decline before Bedford Company experiences a loss? D. What would be the sales dollars and number of units sold if Bedford Company wishes to have a target profit of $4,000?
Business
1 answer:
VikaD [51]3 years ago
3 0

Answer:

Results are below.

Explanation:

Giving the following information:

In June, Bedford Company sold 350 widgets. The average sales price was $34. During the month, fixed costs were $6,320 and variable costs were 40% of sales.

F<u>irst, we need to calculate the unitary variable cost:</u>

Unitary variable cost= 34*0.4= $13.6

<u>Now, we can determine the contribution margin per unit and the contribution margin ratio:</u>

contribution margin per unit= selling price - unitary variable cost

contribution margin per unit= 34 - 13.6= $20.4

contribution margin ratio= contribution margin per unit/selling price

contribution margin ratio= 20.4/34

contribution margin ratio= 0.6

<u>To calculate the break-even point in units and dollars, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 6,320/20.4

Break-even point in units= 310 units

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 6,320/0.6

Break-even point (dollars)= $10,533

<u>To calculate the margin of safety, we will use the following formula:</u>

Margin of safety= (current sales level - break-even point)

Margin of safety= 350*34 - 10,533

Margin of safety= $1,367

<u>Finally, the desired profit is $4,000:</u>

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units=  (6,320 + 4,000) / 20.4

Break-even point in units= 506 units

Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio

Break-even point (dollars)= 10,320/0.6

Break-even point (dollars)= $17,200

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7 0
2 years ago
Susan can pick 4 pounds of coffee in an hour or gather 2 pounds of nuts. tom can pick 2 pounds of coffee in an hour or gather 4
Kryger [21]

Answer: Total earning is $96 for both Susan and Tom

Explanation:

Susan can pick 4 pounds of coffee or 2 pounds of nuts.

Tom can pick 2 pounds of coffee or 4 pounds of nuts.

Price of Coffee = $2 per pound

Price of Nuts = $2 per pound

Opportunity cost of producing coffee for Susan = 2/4 = 0.5

Opportunity cost of producing coffee for Tom = 4/2 = 2

Opportunity cost of coffee is low for Susan, so she has a comparative advantage in it.

So, Susan produces 6*4 = 24 pounds of coffee, total revenue from sale of coffee is $24*2 = $48

Opportunity cost of producing Nuts for Susan = 4/2 = 2

Opportunity cost of producing Nuts for Tom = 2/4 = 0.5

Opportunity cost of coffee is low for Tom, so he has a comparative advantage in it.

So, Tom produces 6*4 = 24 pounds of nuts, total revenue from sale of nuts is $24*2 = $48

So, total earning = $48+$48 = $96

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3 years ago
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating act
kondor19780726 [428]

Answer:

Indicate how each item should be classified in the statement of cash flows using these four major classifications

Explanation:

Cash flows from operating activities

Profit before taxation

Adjustments for:

Depreciation

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Working capital changes:

(Increase) / Decrease in trade and other receivables

(Increase) / (Decrease) in inventories

Increase / (Decrease) in trade payables

Cash generated from operations

Interest paid

Income taxes paid

Dividends paid

Net cash from operating activities

Cash flows from investing activities

Business acquisitions, net of cash acquired

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Proceeds from sale of equipment

Acquisition of portfolio investments

Investment income

Net cash used in investing activities

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4 0
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Political distance refers to a difference in opinion and policies as well as relations that countries have amongst themselves. In this scenario, this is the most likely bone of contention that would prevent Macmillan Toys from expanding into Rusalka.

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Answer:

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A. True

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