Mancine Corporation has provided the following contribution format income statement. All questions concern situations that are...

  

Transcribed Image Text:

Mancine Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (3,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Required: $ 150,000 90,000 60,000 42,000 $ 18,000 i. What is the unit contribution margin and break-even point in unit sales? (3 marks) ii. Estimate how many units must be sold to achieve a target profit of $50,000. (2 marks) Part B (Consider this case independently) Naumann Corporation produces and sells a single product. Data concerning that product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $ 190 100% 38 20% $ 152 80% Fixed expenses are $110,000 per month. The company is currently selling 1,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $56. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (7 marks) Part C (Consider this case independently) (if not divisible, round the numerals to two decimal places) Brancati Incorporated produces and sells two products. Data conceming those products for the most recent month appear below: Sales Variable expenses Product W07C Product B29Z $25,000 $7,000 $27,000 $8,600 Fixed expenses for the entire company were $32,860. Required: i. Determine the overall contribution margin ratio and break-even points for the company in total sales dollars. (4 marks) ii. If the sales mix remains the same, determine the break-even points for the Product W07C and Product B29Z in total sales dollars. (4 marks) Mancine Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (3,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Required: $ 150,000 90,000 60,000 42,000 $ 18,000 i. What is the unit contribution margin and break-even point in unit sales? (3 marks) ii. Estimate how many units must be sold to achieve a target profit of $50,000. (2 marks) Part B (Consider this case independently) Naumann Corporation produces and sells a single product. Data concerning that product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $ 190 100% 38 20% $ 152 80% Fixed expenses are $110,000 per month. The company is currently selling 1,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $56. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (7 marks) Part C (Consider this case independently) (if not divisible, round the numerals to two decimal places) Brancati Incorporated produces and sells two products. Data conceming those products for the most recent month appear below: Sales Variable expenses Product W07C Product B29Z $25,000 $7,000 $27,000 $8,600 Fixed expenses for the entire company were $32,860. Required: i. Determine the overall contribution margin ratio and break-even points for the company in total sales dollars. (4 marks) ii. If the sales mix remains the same, determine the break-even points for the Product W07C and Product B29Z in total sales dollars. (4 marks)

Answer rating: 100% (QA)

i Unit Contribution Margin and Breakeven Point Unit Contribution Margin Contribution Margin Units So... View the full answer