Allen Company sells flags with team logos. Allen Company has fixed costs of $770,000 per year...
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Allen Company sells flags with team logos. Allen Company has fixed costs of $770,000 per year plus variable costs of $11.00 per flag. Each flag sells for $22.00. Read the requirements. Requirement 1. Use the equation approach to compute the number of flags Allen Company must sell each year to break even. First, select the formula to compute the required sales in units to break even. Net sales revenue Variable costs Fixed costs Rearrange the formula you determined above and compute the required number of flags to break even. The number of flags Allen must sell each year to break even is 70,000 Target profit Requirement 2. Use the contribution margin ratio approach to compute the dollar sales Allen Company needs to earn $22,000 in operating income for the year. (Round the contribution margin ratio to two decimal places.) Begin by showing the formula and then entering the amounts to calculate the required sales dollars to earn $22,000 in operating income. (Round the required sales in dollars up to the nearest whole dollar. For example, $10.25 would be rounded to $11. Abbreviation used: CM = contribution margin.) (Fixed costs + Target profit ) + ($770,000 + $ 22,000 CM ratio 50.00 % = Required sales in dollars $ 1,584,000 Requirement 3. Prepare Allen Company's contribution margin income statement for the year ended December 31, for sales of 62,000 flags. (Round your final answers up to the next whole number.) (Use parentheses or a minus sign for an operating loss.) Allen Company Contribution Margin Income Statement For Year Ended December 31 Contribution Margin Cost of Goods Sold Fixed Costs Gross Profit Sales Revenue Variable Costs Allen Company sells flags with team logos. Allen Company has fixed costs of $770,000 per year plus variable costs of $11.00 per flag. Each flag sells for $22.00. Read the requirements. Requirement 1. Use the equation approach to compute the number of flags Allen Company must sell each year to break even. First, select the formula to compute the required sales in units to break even. Net sales revenue Variable costs Fixed costs Rearrange the formula you determined above and compute the required number of flags to break even. The number of flags Allen must sell each year to break even is 70,000 Target profit Requirement 2. Use the contribution margin ratio approach to compute the dollar sales Allen Company needs to earn $22,000 in operating income for the year. (Round the contribution margin ratio to two decimal places.) Begin by showing the formula and then entering the amounts to calculate the required sales dollars to earn $22,000 in operating income. (Round the required sales in dollars up to the nearest whole dollar. For example, $10.25 would be rounded to $11. Abbreviation used: CM = contribution margin.) (Fixed costs + Target profit ) + ($770,000 + $ 22,000 CM ratio 50.00 % = Required sales in dollars $ 1,584,000 Requirement 3. Prepare Allen Company's contribution margin income statement for the year ended December 31, for sales of 62,000 flags. (Round your final answers up to the next whole number.) (Use parentheses or a minus sign for an operating loss.) Allen Company Contribution Margin Income Statement For Year Ended December 31 Contribution Margin Cost of Goods Sold Fixed Costs Gross Profit Sales Revenue Variable Costs
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Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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