Tracy, Inc., estimates that next years results will be: Sales revenue (75,000 units) . . . .
Question:
Tracy, Inc., estimates that next year’s results will be:
Sales revenue (75,000 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 900,000
Less variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (375,000)
Less fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000)
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 225,000
Recompute profit, assuming each of the following independent conditions:
1. A 9% increase in the contribution margin
2. An 8% increase in the sales volume
3. A 4% decrease in the sales volume
4. A 6% increase in variable costs per unit
5. A 5% decrease in fixed costs
6. A 5% increase in fixed costs
7. A 12% increase in the sales volume and a 6% increase in fixed costs
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain