Submitted by: Submitted by swernert
Views: 756
Words: 730
Pages: 3
Category: Business and Industry
Date Submitted: 07/17/2011 04:50 PM
Sheri Wernert
BUS 630: Managerial Accounting
Problem 4-21
Professor Meeks
June 12, 2011
Problem 4-21
Given:
|Selling Price |$30.00 |
| | |
|Variable Expenses: | |
| Invoice cost |$13.50 |
| Sales Commission |4.50 |
|Total Variable expenses |$18.00 |
| | |
|Fixed expenses: | |
| Advertising |$30,000 |
| Rent |20,000 |
| Salaries |100,000 |
|Total Fixed Expenses |$150,000 |
|Contribution Margin |Total |Per pair of shoes |
|Selling |$30 |$30 |
|Variable Expenses |18 |18 |
|Contribution Margin |$12 |$12 |
|CM ratio |Total |Per Pair |Percentage |
| | |Of shoes | |
|Selling |$30 |$30 | |
|Variable expenses |18 |18 | |
|Contribution Margin |$12 |$12 |0.40 |
1) Calculate the annual break-even point in dollar sales and in unit sales for Shop 48.
Break-even point in dollars = fixed expenses/cm ratio
= $150,000/0.40
= $375,000
Break-even point in unit sales = fixed expenses/unit cm
= $150,000/$12.00...