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
Vesna [10]
3 years ago
5

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, an

d fixed expenses were $65,000.
Required:
1. What is the company’s contribution margin (CM) ratio?
2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,000?
Business
1 answer:
valkas [14]3 years ago
4 0

Answer:

(1) 0.4 or 40%

(2) $400

Explanation:

1)

Unit selling price = Total sales ÷  Number of units

                            = $200,000 ÷  50,000

                            = $4

Unit variable expense = Total variable expenses ÷ number of units

                                    = $120,000 ÷ 50,000

                                    = $2.4

Contribution margin per unit = Selling price per unit - Variable cost per unit

                                               = $4 - $2.4

                                               = $1.6

Now, computing the contribution margin ratio as :

 Contribution margin ratio = Unit Contribution margin ÷ Unit selling price

                                          = $1.6 / $4

                                          = 0.4 or 40%

(2) Change in net operating income:

= Increase in total sales ×   Contribution margin ratio

= $1,000 × 0.4

= $400

Therefore, the net operating income increases by $400.

You might be interested in
While it sounds reasonable that companies should focus on making the products it knows how to make really well, one downside of
borishaifa [10]

Answer:

Customer may not want the product which the company is making well.

Explanation:

It is not necessary that market needs those products which the company is producing perfectly. It cannot enter into product differentiation and cannot meet customer demands and needs of specific or altered products. The company can achieve specialization and can be a niche player in the market but also on the other hand company’s business is limited to only few products at which it is perfect. It cannot allow customization to its products.

6 0
3 years ago
Which of the following is true? Overhead costs are often affected by many issues and are frequently too complex to be explained
11111nata11111 [884]

Answer:

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

Explanation:

An overhead cost is not directly defined, to be that of material, or labor, or any other unit, overhead include, many factors, electricity usage, machine hours usage, water usage, or the capacity utilization of machinery, and various other factors. Since its computation and allocation is not clear many a times, a single overhead like that of electricity, has many factors, ideal usage of electricity, or machine hours used in production or simply the total cost of overheads for that month or building or etc: and its utilization. In short, to conclude we can state that overhead costs are complex in nature.

All other options are false.

Final Answer

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

8 0
3 years ago
A 14-week construction activity requires a crane that rents for $1,000 per week and a crew of general laborers that costs $5,000
Helen [10]

Answer: C) $2,000 per week.

Explanation:

The slope of the project refers to the additional amount that it would cost to be able to finish the project faster than schedule.

In the question, the construction activity is for 14 weeks at a rate of $5,000 for the laborers per week. If you wanted to reduce this project duration to 10 weeks, you will have to spend an additional $2,000 more per week.

This $2,000 is therefore the slope of the activity.

3 0
2 years ago
Please Help! What are the top 2 industries affected by data breaches?
Andrej [43]

The answer would be Health and Government, I believe.

7 0
3 years ago
PLZ!!! SOMEONE HELP ME Drag each label to the correct location on the table. Match the characteristics with the organizations th
astra-53 [7]

Answer:

umm you already said it

Explanation:

...

5 0
3 years ago
Read 2 more answers
Other questions:
  • Which organization sets monetary policy for the United States?
    12·2 answers
  • A company must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units t
    11·1 answer
  • Waterway Industries can produce 100 units of a component part with the following costs: Direct Materials $15800 Direct Labor 690
    10·1 answer
  • Aubrey uses her credit card to buy some clothes for $552.86. She can pay up to $195 on the credit card each month. What is the t
    5·1 answer
  • A company produces 500 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactu
    15·1 answer
  • Which is a technique advertisers employ to increase consumer demand for their goods and services?
    9·1 answer
  • A storage tank acquired at the beginning of the fiscal year at a cost of $90,000 has an estimated residual value of $12,000 and
    14·1 answer
  • In the United States, many local communities provide public libraries and parks. This is an example of a local government fullin
    6·2 answers
  • XYZ Company produces a significant daily amount of electronic waste. The company disposes the waste into the ocean despite stric
    10·1 answer
  • What is the monopolist's profit under the following conditions? The profit-maximizing price charged for goods produced is $12. T
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!