[6 marks] Alicia's Infinity is an art boutique that specializes in wedding invitations and stationeries. Alicia's...
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[6 marks] Alicia's Infinity is an art boutique that specializes in wedding invitations and stationeries. Alicia's Infinity earned net income of $44,815 during 2020. The company wants to earn net income of $120,000 more during 2021. The company's fixed costs are expected to be $128,300, and variable costs are expected to be 30% of sales. Instructions (a) Determine the required sales to meet the target net income during 2021. (2 marks) (b) Compute break-even sales using the contribution margin ratio. (2 marks) (c) Compute margin of safety ratio assuming actual sales in 2020 were $235,450. (2 marks) [6 marks] Alicia's Infinity is an art boutique that specializes in wedding invitations and stationeries. Alicia's Infinity earned net income of $44,815 during 2020. The company wants to earn net income of $120,000 more during 2021. The company's fixed costs are expected to be $128,300, and variable costs are expected to be 30% of sales. Instructions (a) Determine the required sales to meet the target net income during 2021. (2 marks) (b) Compute break-even sales using the contribution margin ratio. (2 marks) (c) Compute margin of safety ratio assuming actual sales in 2020 were $235,450. (2 marks)
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Required sales Fixed cost desired profit Contribution margin ratio 12830... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas
Posted Date:
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