Quiz 5 Essay Example
Quiz 5
Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:
Total Per Unit Sales $ 620,000 $ 40 Variable expenses 434,000 28 ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Contribution margin 186,000 $ 12 Fixed expenses 150,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ ________________________________________ ________________________________________ Net operating income $ 36,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________
________________________________________
Required:
1. What is the monthly break-even point in units sold and in sales dollars? (Omit the "$" sign in your response.)
Break-even point in unit sales units
Break-even point in sales dollars $
________________________________________
2. Without resorting to computations, what is the total contribution margin at the break-even point? (Omit the "$" sign in your response.)
Total contribution margin $
3. How many units would have to be sold each month to earn a target profit of $54,000? Use the formula method.
Units sold
4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.(Round your percentage answer to 2 decimal places. Omit the "$" and "%" signs in your response.)
Dollars Percentage Margin of safety $ %
Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:
Total Per Unit Sales $ 620,000 $ 40 Variable expenses 434,000 28 ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Contribution margin 186,000 $ 12 Fixed expenses 150,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ ________________________________________ ________________________________________ Net operating income $ 36,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________
________________________________________
Required:
1. What is the monthly break-even point in units sold and in sales dollars? (Omit the "$" sign in your response.)
Break-even point in unit sales units
Break-even point in sales dollars $
________________________________________
2. Without resorting to computations, what is the total contribution margin at the break-even point? (Omit the "$" sign in your response.)
Total contribution margin $
3. How many units would have to be sold each month to earn a target profit of $54,000? Use the formula method.
Units sold
4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.(Round your percentage answer to 2 decimal places. Omit the "$" and "%" signs in your response.)
Dollars Percentage Margin of safety $ %