Tracy, Inc., estimates that next years results will be: Sales revenue (75,000 units) . . . .

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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
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...
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Accounting concepts and applications

ISBN: 978-0538745482

11th Edition

Authors: Albrecht Stice, Stice Swain

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