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Illusion [34]
3 years ago
15

4. The following is Arkadia Corporation's contribution format income statement for last month: Sales $1,200,000 Variable expense

s 800,000 Contribution margin 400,000 Fixed expenses 300,000 Net operating income $100,000 The company has no beginning or ending inventories and produced and sold 20,000 units during the month. (Each requirement is worth 3 points for a total of 18 points) Required: a. What is the company's contribution margin ratio
Business
1 answer:
Assoli18 [71]3 years ago
3 0

Answer:

Missing word <em>"sold 20,000 units during the month at a sales price of $60 per unit.. b. What is the company's degree of operating leverage? c. How many units would the company have to sell to achieve a desired operating income before taxes of $150,000?"</em>

<em />

a. Contribution Margin Ratio = Contribution margin / Sales

= 400000 / 1200000

= 0.3333

= 33.33%

b. Operating Leverage = Contribution / Net Income

= 400000 / 100000

= 4 Times

c. Sale to achieve desired profit = (Fixed Cost + Desired Profit) / Contribution Margin Ratio

= (300000 + 150000) / 0.3333

= $1350000

Sales in Units = $1350000 / 60 units = 22500 units

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The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $5
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Answer:

Creamy Crisp's total revenues exceed its total costs, including a normal profit, by $366,000

Explanation:

Creamy Crisp's total revenue exceeds its total cost, including a normal profit by =

When answering this we use all the actual costs and revenue and all the hypothetical figures, or the opportunity costs and revenue as we need to calculate total revenue exceeding costs and normal profits.

Total revenue actual + potential = Entrepreneur's potential earnings as a salaried worker $50,000 + Annual revenue from operations $380,000 + Value of entrepreneur's talent in the next best entrepreneurial activity $80,000 + Entrepreneur's forgone interest on personal funds used to finance the business $6,000

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Since normal profit is included and not excluded normal profit shall not be computed separately and the final answer is $366,000

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<h3>What is mass production?</h3>

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