Week 5 Graded Homework

In the year 2013, Wiggins Processing Company had the following contribution income statement:

Sales		$ 1,200,000
Variable costs
Cost of goods sold	$ 420,000
Selling and administrative	200,000	(620,000)
Contribution margin		580,000
Fixed Costs
Factory overheard	205,000
Selling and administrative	80,000	(285,000)
Before-tax profit		295,000
Income taxes (36%)		(106,200)
After-tax profit		$ 188,800

(a) Determine the annual break-even point in sales dollars.

Roundcontribution margin ratioto two decimal places foryour calculation. $Answer

Incorrect 0.00 points out of 1.00 (b) Determine the annual margin of safety in sales dollars.

Use rounded answer from above for calculation. $Answer

Incorrect 0.00 points out of 1.00 (c) What is the break-even point in sales dollars if management makes a decision that increases fixed costs by $57,000?

Use rounded contribution margin ratio (2 decimal places)foryour calculation. $Answer

Incorrect 0.00 points out of 1.00 (d) With the current cost structure, including fixed costs of $285,000, what dollar sales volume is required to provide an after-tax net income of $200,000?

Use rounded contribution margin (2 decimal places) for calculation. Round your answer to the nearest dollar. $Answer

Incorrect 0.00 points out of 1.00 (e) Prepare an abbreviated contribution income statement to verify that the solution to part (d) will provide the desired after-tax income.

Round your answers to the nearest dollar. Use rounded answers for subsequent calculations. Do not usenegative signs with any of your answers.

Sales	$Answer Incorrect 0.00 points out of 1.00
Variable costs (52% of sales)	Answer Incorrect 0.00 points out of 1.00
Contribution margin	Answer Correct 1.00 points out of 1.00
Fixed costs	Answer Correct 1.00 points out of 1.00
Net income before taxes	Answer Correct 1.00 points out of 1.00
Income taxes (36%)	Answer Correct 1.00 points out of 1.00
Net income after taxes	$ Answer