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EXERCISE 20. Using Cost-Volume-Profit Formulas. MURDER TO GO! Writes and manufactures murder mystery parlor games that it sells to retail Using...
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EXERCISE 20.7: Using Cost-Volume-Profit Formulas.
MURDER TO GO! Writes and manufactures murder mystery parlor games that it sells to retail
Using Cost-Volume-Profit Formulas. The following is per-unit information relating to the manufacture and sale of this product:
Unit sales price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30
Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fixed costs per year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,000
Determine the following, showing as part of your answer the formula that you used in your computation.
For example, the formula used to determine the contribution margin ratio (part a ) is:
Contribution Margin Ratio = Unit Sales Price – Variable Costs per Unit
Unit Sales Price
a. Contribution margin ratio.
b. Sales volume (in dollars) required to break even.
c. Sales volume (in dollars) required to earn an annual operating income of $440,000.
d. The margin of safety (in dollars) if annual sales total 60,000 units.
e. Operating income if annual sales total 60,000 units.
