Characteristic of Successful Enterpreurs

Question 1

Whirly Corporation’s most recent income statement is shown below:

Total Per Unit

Sales (10,000 units) $350,000 $35.00

Variable expenses 200,000 20.00

Contribution margin 150,000 $15.00

Fixed expenses 135,000

Net operating income , $15,000

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently)

1. The sales volume increases by 100 units.

2. The sales volume decreases by 100 units.

3. The sales volume is 9,000 units.

4. Compute the break even in units (use contribution per unit).

Question 2

Sales price per unit is $13.

Variable cost per unit 5

In year 2014 the company sold 80,000 units which was 5,000 units above the break even point

Required

a) calculate the fixed expenses (Hint: Compute contribution margin per unit)

b) Total variable expenses at the break even point.

c) Total sales ($) at break even point.

Question 3

A company has sales of $1,000,000. Variable costs is $600,000 and fixed cost is $250,000. Compute the following

a) contribution margin ratio

b) break even sales volume

c) margin of safety ($) and (percentage)

Question 4

Karlik Enterprises distributes a single product whose selling price is $24 and whose variable expense is $18 per unit. The company’s monthly fixed expense is $24,000.

Required:

1. compute the break even in unit and $..

2. compute the break even in units if the selling price increase by 20% and variable cost decrease by 5%.

Question 5

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000.

Required

1. What is the company’s contribution margin (CM) ratio?

2. Estimate the change in the company’s net operating income if it were to increase its total sales by $1,000. (prepare the contribution income statement)

Question 6

Mauro Products distributes a single product, a woven basket whose selling...