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11111nata11111 [884]
3 years ago
6

Bloom Company management predicts that it will incur fixed costs of $266,000 and earn pretax income of $360,400 in the next peri

od. Its expected contribution margin ratio is 54%. Required: 1. Compute the amount of total dollar sales. 2. Compute the amount of total variable costs.
Business
1 answer:
Rasek [7]3 years ago
8 0

Answer:

1. $1,160,000

2. $534,600

Explanation:

1. Computation for the amount of total dollar sales

Using this formula

Total dollar sales=Fixed costs plus pretax income / Contribution margin ratio

Let plug in the formula

Total dollar sales=$626,400 / 54%

Total dollar sales =$1,160,000

($266,000+$360,400=$626,400)

Therefore the amount of total dollar sales is $1,160,000

2.Computation for the amount of total variable costs.

Sales $1,160,000

Less:

Fixed costs ($265,000)

Pretax income ($360,400)

Variable costs $534,600

Therefore the amount of total variable costs is $534,600

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One reason a student may seek a federal student loan instead of a private student loan is that
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The U.S. fiduciary monetary system: a. is one where money is not convertible to a valuable commodity such as gold. b. is the one
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Option a

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The fiduciary currency is supplied in the economy by Fed. Fiduciary money can be classified into two categories namely,

  • Paper money - Includes all the banknotes  
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3 years ago
Manufacturing costs from a scraped poor-quality product are $6000 per year. AN investment in an employee training program can re
romanna [79]

Answer:

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Prog B will give annual CF of 95%*$6000 = $5700

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3 years ago
Break-Even Sales Under Present and Proposed Conditions
solong [7]

Answer:

<h3>Portmann Company</h3>

1. Total variable costs = $89,000,000

Total fixed costs = $40,600,000

2. a Unit variable cost = $89

b. Unit contribution margin = $100

3. Break-even sales (units) = Fixed cost/Contribution margin per unit

= $40,600,000/$100

= 406,000 units

4. Break-even sales (units) = Fixed cost/Contribution margin per unit

= $45,100,000/$100

= 451,000 units

5. Break-even sales (units) to achieve target profit = (Fixed cost + Target Profit)/Contribution margin per unit

= ($45,100,000 + $59,400,000)/$100

= 1,045,000 units

6. Maximum operating income possible with the expanded plant is:

= $61,900,000

7. Operating income if the proposal is accepted and sales remain at the current level is:

= $54,900,000

Explanation:

a) Data and Calculations:

Sales volume during current year = 1,000,000

Sales price per unit during current year = $189

Income statement is as follows:

Sales                                $189,000,000

Cost of goods sold           (101,000,000)

Gross profit                      $88,000,000

Expenses:

Selling expenses             $16,000,000

Administrative expenses  12,600,000

Total expenses                (28,600,000)

Operating income          $59,400,000

                                      Variable    Fixed

Cost of goods sold           70%        30%

Selling expenses              75%        25%

Administrative expenses 50%        50%

Total variable costs for the current year:

                                      Variable  

Cost of goods sold           70% * $101,000,000 = $70,700,000

Selling expenses              75% * $16,000,000 =     12,000,000

Administrative expenses 50% * $12,600,000 =      6,300,000

Total variable costs = $89,000,000

Variable unit cost = $89 ($89,000,000/1,000,000)

Contribution per unit = $100 ($189 - $89)

Total fixed costs for the current year:

                                          Fixed

Cost of goods sold             30% * $101,000,000 = $30,300,000

Selling expenses                25% * $16,000,000  =      4,000,000

Administrative expenses   50% * $12,600,000 =       6,300,000

Total fixed costs =  $40,600,000

Projected sales for the next year = $202,230,000 ($189,000,000 + $13,230,000)

Percentage Increase in sales for the next year = $13,250,000/$189,000,000 * 100 = 7%

Fixed costs caused by expansion = $4,500,000

Total fixed costs = $45,100,000 ($40,600,000 + $4,500,000)

Variable costs = $95,230,000 ($89,000,000 * 1.07)

Contribution margin:

Sales                                $202,230,000

Variable costs                      95,230,000

Contribution margin        $107,000,000

Expenses:

Fixed costs                          45,100,000

Operating income            $61,900,000

Sales volume = 1,070,000 units (1,000,000 * 1.07)

Contribution per unit = $107,000,000/1,070,000 = $100

Sales at current level:

Sales                                $189,000,000

Variable costs                     89,000,000

Contribution                    $100,000,000

Fixed costs                          45,100,000  

Operating income           $54,900,000

6 0
3 years ago
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