Question:

B&L Landscapes, Inc. Mini Practice Part 4 Bill Graham and Lorry Miller incorporated B&L Landscapes lnc., on July 1, 2016, The business consists of lawn care and sprinkler system installations, In addition, they also sell two types of fertilizer.

During 2017. B&L Landscapes Inc.acquired a 305 interest in Crestline Pipe. The president of Crestline has been expressing concern about the profitability of the company, 8il and Lary want to help and have volunteered your services to provide some managerial reporting for Crestline.

Crestline Pipe distributes high-quality inch PVC pipe that sells for $3.00 per linear foot unit Variable costs are $0.90 per unit, and fixed costs total 27,000 per year.

Assume that the operating results for last year were:

Sales	$60,000
Less variable expenses	18,000
Contribution margin	42,000
Less fixed expenses	22,000
Net operating income	$15,000

Instructions:

1. What is the product\'s contribution margin? What is the product\'s CM ratio?

2. Use the contribution margin to determine the break-even point in sales units found to whole units). Use the CM roto to determine re break-even point males dollars (round to whole dollars).

What is the margin of safety in dollars and units for Crestline Pipe

4 Due to an increase in demand, the company estimates that sales will increase by $20,000 this year. By how much should net operating income increase for net operating loss decrease). assuming that fixed costs do not change?

5. The president expects sales to increase by 25% this year. If sales do increase by 25%. how much could fed costs increase and still maintain, net operating income of $15,000

6 The president would like to reduce the sales price of the pipe to $2.70 per linear foot unit and increase advertising by $3,000 Using the CM method, what is the breakeven point in units with these changes found to whole units)? How many units would Crestline have to sell to maintain a net operating income of at least $15,000 found to whole units)

Prepare your growers in a memorandum to the President of Crestline Pipe.

Answer rating: 100% (QA)

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