ABC Company is a maker of chairs for schools and universities They have provided you with...
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ABC Company is a maker of chairs for schools and universities They have provided you with the following financial information. You are required to prepare a contribution margin income statement Selling price per chair $200 Materials per chair $60 Labor cost per chair $40 Rent I $1,000 Salary of a Security guard $1,000 Salary of the manager $1,000 Based on the above, answer the following: a) How many units would they have to sell to breakeven? b) How much would the sales have to be in dollar value to breakeven? c) How many units would they have to sell to achieve a profit of $12,000? d) Assume they sell 100 units. If they can save 10% from the overheads, determine the percent increase in their profit. e) Assume they sell 100 units. If they can save 20% from the direct costs, determine the percent increase in their profit. ABC Company is a maker of chairs for schools and universities They have provided you with the following financial information. You are required to prepare a contribution margin income statement Selling price per chair $200 Materials per chair $60 Labor cost per chair $40 Rent I $1,000 Salary of a Security guard $1,000 Salary of the manager $1,000 Based on the above, answer the following: a) How many units would they have to sell to breakeven? b) How much would the sales have to be in dollar value to breakeven? c) How many units would they have to sell to achieve a profit of $12,000? d) Assume they sell 100 units. If they can save 10% from the overheads, determine the percent increase in their profit. e) Assume they sell 100 units. If they can save 20% from the direct costs, determine the percent increase in their profit.
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Answer rating: 100% (QA)
To prepare a contribution margin income statement we need to calculate the contribution margin per unit and consider the fixed costs Given information Selling price per chair 200 Materials per chair 6... View the full answer
Related Book For
Accounting for Governmental and Nonprofit Entities
ISBN: 978-1259917059
18th edition
Authors: Jacqueline L. Reck, James E. Rooks, Suzanne Lowensohn, Daniel Neely
Posted Date:
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