Wolsey Industries Inc. expects to maintain the same inventories at the end of 2014 as at the
Question:
It is expected that 21,875 units will be sold at a price of $ 160 a unit. Maximum sales within the relevant range are 27,000 units.
Instructions
1. Prepare an estimated income statement for 2014.
2. What is the expected contribution margin ratio?
3. Determine the break- even sales in units and dollars.
4. Construct a cost- volume- profit chart indicating the break- even sales.
5. What is the expected margin of safety in dollars and as a percentage of sales?
6. Determine the operatingleverage.
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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Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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