Donaldson Company
Question:
Donaldson Company | |||||||
Data Inputs: | |||||||
Unit sales | 40,000 | ||||||
Selling price per unit | $ 12.50 | ||||||
Variable expense per unit | $ 7.50 | ||||||
Total fixed expenses | $ 180,000 | ||||||
Contribution Format Income Statement | Margin of Safety | ||||||
Total | Per Unit | % | Actual sales (a) | $ 500,000 | |||
Sales | $ 500,000 | $ 12.50 | 100% | Break-even sales (b) | $ 450,000 | ||
Variable expenses | 300,000 | 7.50 | 60% | Margin of safety in dollars (a) - (b) | $ 50,000 | ||
Contribution margin | 200,000 | $ 5.00 | 40% | Margin of safety percentage | 10.00% | ||
Fixed expenses | 180,000 | ||||||
Net operating income | $ 20,000 | ||||||
Net profit margin percentage | 4.00% | ||||||
CVP Graph Information | |||||||
Selling price per unit | $ 12.50 | ||||||
Variable expense per unit | $ 7.50 | ||||||
Total fixed expenses | $ 180,000 | ||||||
CVP Graph Table | Units | Variable Expenses | Fixed Expenses | Total Expenses | Sales dollars | ||
- | |||||||
5,000 | |||||||
10,000 | |||||||
15,000 | |||||||
20,000 | |||||||
25,000 | |||||||
30,000 | |||||||
35,000 | |||||||
40,000 | |||||||
45,000 | |||||||
50,000 | |||||||
CVP Graph |
- Using Goal Seek:
a. Calculate the unit sales required to break even.
b. Calculate the unit sales required to attain a target profit of $25,000. What would be the company's margin of safety (in dollars) at this level of sales?
c. Calculate the selling price per unit required to attain net operating income of $30,000.
d. Calculate the variable expense per unit required to attain net operating income of $30,000.
e. Calculate the unit sales required to attain a margin of safety of $75,000.
2. Using Solver:
a. Calculate the unit sales required to attain a margin of safety percentage of 15%.
b. Restore the original values in your Excel file. Calculate the unit sales required to attain a profit margin of 8%.
c. Restore the original values in your Excel file. Calculate the selling price per unit required to attain a profit margin of 10%.
d. Restore the original values in your Excel file. Calculate the variable expense per unit required to attain a profit margin of 6%.