Accounting

Lea Padilla

1.

Contribution Margin Ratio = Total contribution Margin / Total Sales

Contribution Margin Ratio = (4,000,000 – 2,000,000) / 10,000,000

Contribution Margin Ratio = 2,000,000 / 10,000,000

Contribution Margin Ratio = .20 or 20%

Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio

Break-even point in sales dollars = 100,000 / .20

Break-even point in sales dollars = $ 500,000

2.

Total New Fixed Costs = 100,000 + (30,000 x 3) + 160,000

Total New Fixed Costs = 100,000 + 90,000 + 160,000

Total New Fixed Costs = $ 350,000

New Variable Costs = 6,000,000 + (.05 x 10,000,000)

New Variable Costs = 6,000,000 + 500,000

New Variable Costs = 6,500,000

New Contribution Margin Ratio = (10,000,000 – 8,500,000) / 10,000,000

New Contribution Margin Ratio = 3,500,000 / 10,000,000

New Contribution Margin Ratio = .35 or 35%

Break-even Point in Sales dollars = 350,000 / .35

Break-even Point in Sales Dollars = $ 1,000,000

3.

New Variable Costs = 6,000,000 + (.25 x 10,000,000)

New Variable Costs = 8,500,000

New Contribution Margin Ratio = (10,000,000 – 8,500,000) / 10,000,000

New contribution margin Ratio = .15 or 15%

Estimated Volume in Sales Dollars Required = (1,900,000 + 100,000) / .15

Estimated Volume in Sales Dollars Required= 2,000,000 / .15

Estimated Volume in Sales Dollars Required = $ 13,333,333

4.

Estimated Sales Volume in Sales Dollars = (1,900,000 + 100,000) / .20

Estimated Sales Volume in Sales Dollars = 2,000,000 / .20

Estimated Sales Volume in Sales Dollars = $ 10,000,000

Estimated Volume in Sales Dollars Required = (1,900,000 + 100,000) / .15

Estimated Volume in Sales Dollars Required= 2,000,000 / .15

Estimated Volume in Sales Dollars Required = $ 13,333,33