Question: I need help answering the following problems: Problem 1: ABC Company produces one product. The sales price per unit is $65 and the Variable cost

I need help answering the following problems:

Problem 1: ABC Company produces one product. The sales price per unit is $65 and the Variable cost per unit is $44. Calculate the following:

Contribution Margin

Contribution Margin Ratio

Problem 2:

ABC Company has monthly fixed costs of $150,000.

Calculate the following:

Break-Even in Units

Break-Even in Dollars

Problem 3:

ABC Company would like to earn an after tax profit of $55,000 for the month. They are in a 30% tax bracket.

Calculate the following:

Target Pre-Tax in Units

Target Pre-Tax Target in Dollars

Problem 4:

ABC Company has $541,000 in expected sales for next month.

Calculate the following:

Margin of Safety

Problem 5:

ABC Company is considering purchasing a new machine that will automate several of their manufacturing operations. The new machine will increase fixed costs by $20,000 per month, and decrease the per unit variable cost by $4. Using cost analysis, should ABC Company invest in this new machine?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!