You Break It, We Fix-it Repair Shop has a monthly target profit of $18,900. Variable costs are 62%of sales, and monthly fixed costs are $7,500. (Note: 100% of Sales = Variable Costs +Contribution Margin).(Round your answers to two decimal places when needed and use rounded answers for all futurecalculations).1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.(FixedCosts(FixedCosts++++Expected sales-TargetProfit)TargetProfit)11Contribution Margin perratio (%)Contribution Marginratio (%)====Required Sales in Dollars toBreak-evenRequired Sales in Dollars to meetTarget ProfitBreak-even sales = Margin of safety in dollars2. Express what You Break It, We Fix-it Repair Shop margin of safety is as a percentage of targetales.Margin of safety in dollars/ Expected sales in dollars = Margin of safety ratio (%)

Cost volume profit analysis is the technique used by management for decision-making. The methods…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $70 per person as a one-day entrance fee. Variable costs per person are $26 and a fixed cost amount to $217,700 per month.(Round your answers to two decimal places when needed and use rounded answers for all future calculations).1. Compute the new contribution margin per unit and the contribution margin ratio if Wild-Water Works Water Park increase its variable costs to $30.
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Required: 1. Complete the following table. 2. Suppose Sandy Bank sells its canoes for $590 each. Calculate the contribution margin per canoe and the contribution margin ratio. 3. This year Sandy Bank expects to sell 760 canoes for $590 each. Prepare a contribution margin income statement for the company. 4. Calculate Sandy Bank's break-even point in units and in sales dollars. Sandy Bank sells its canoes for $590 each. 5. Suppose Sandy Bank wants to earn $76,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. Sandy Bank sells its canoes for $590 each. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table. Note: Round your "Cost per Unit" answers to 2 decimal places. Number of Canoes Produced and Sold Total costs Variable Costs Fixed Costs Total Costs Cost per Unit Required 3 Required 4 Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit $ $ $ 500 Required 5 780 0 0.00
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Wild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $69 per person as a one-day entrance fee. Variable costs per person are $24 and a fixed cost amount to $236,300 per month. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the new contribution margin per unit and the contribution margin ratio if Wild-Water Works Water Park cuts it ticket price to $40 per person. Net Sales revenue per unit Contribution margin / Net sales revenue = Contribution margin ratio (%) (Fixed Costs 2. Find the break-even point in units and in dollars using the contribution margin approach. (Reminder to write answer in whole units). + Variable costs per unit = Unit Contribution margin (Fixed Costs + Target Profit) / (Contribution Margin per unit) + + Target Profit) 1 = = 1 / (Contribution Margin ratio %) = = Required Sales in Units Required Sales in Dollars
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= Adam's Repair Shop has a monthly target operating income of $12,500. Variable expenses are 75% of sales, and monthly fixed expenses are $9,500. Hint: The contribution margin ratio= 100% - Variable expenses percentage of sales. Read the requirements. Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. = Margin of safety in dollars (Round intermediate calculations up to the nearest whole dollar and your final answer to the nearest whole dollar.) The margin of safety is Requirement 2. Express Adam's margin of safety as a percentage of target sales. Begin by identifying the formula to compute the margin of safety as a percentage of target sales. (Round the percentage to the nearest whole percent.) The margin of safety percentage is % of target sales. Requirement 3. What is Adam's operating leverage factor at the target level of operating income? Begin by identifying the…
1. ABC Taxi has an average fixed cost of $8,000 a year for each car. Each mile driven has variable cost $.40 and collect fares of $.60. How many miles a year does each car have to travel before making profit? a. ABC company is contemplating adding a new line of product, which will require leasing new equipment for a monthly payment of $12,000. Variable costs would be $15.00 per product, and selling price per product is $40. What would be profit or loss if business sell 600 of these products? b. If 800 quantity of products can be sold, and a profit target is $10,000, what price should be charged for each product?

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