YUX Corporation sells a single product for $40. Its management estimates the following revenues and costs for

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YUX Corporation sells a single product for $40. Its management estimates the following revenues and costs for the year 2016:
YUX Corporation sells a single product for $40. Its management

Instructions
(a) Assuming fixed costs and net sales are spread evenly throughout the year, calculate YUX's monthly break-even point in (1) units and (2) dollars.
(b) Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual profit.
(c) Assuming YUX Corporation increases its selling price by 30% and all other factors (including demand) remain constant, determine by what percentage annual profits will increase.
(d) Assume the price remains at $40 per unit and variable costs remain the same per unit, but fixed costs increase by 30% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual profit calculated in part (b).
(e) Determine the sales required to earn an operating income of $360,000 after tax. YUX Corporation's income tax is 40%.

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  book-img-for-question

Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118856994

4th Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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