Chen Bucket Ltd., a manufacturer of rain barrels, had the following data for 2019: Sales.............................................................2,500 units Sales
Question:
Chen Bucket Ltd., a manufacturer of rain barrels, had the following data for 2019:
Sales.............................................................2,500 units
Sales price................................................HK$400 per unit
Variable costs............................................HK$240 per unit
Fixed costs....................................................HK$195,000
Instructions
a. What is the contribution margin ratio?
b. What is the break-even point in sales?
c. What is the margin of safety and the margin of safety ratio?
d. If the company wishes to increase its total dollar contribution margin by 30% in 2020, by how much will it need to increase its sales if all other factors remain constant?
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
a Contribution margin ratio Contribution margin Selling priceUnit HK400 HK240 HK400 40 b Breakeve...View the full answer
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt
