Compute the contribution margin ratio for Kiltop

Assignment Help Accounting Basics
Reference no: EM132452885

Problem - Kiltop Company sells take-away food. The projected income statement for the coming year follows:

 

$

Sales

480,000

Less: variable costs

(249,600)

Contribution margin

230,400

Less: Fixed costs

(180,000)

Net profit

50,400

Required -

1. Compute the contribution margin ratio for Kiltop.

2. How much revenue must Kiltop earn in order to break-even?

3. What volume of sales must be earned if Kiltop wants to earn an after-tax profit equal to 8 per cent of sales? Assume that the tax rate is 34 per cent.

4. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 10 per cent?

5. Suppose that management has decided to give a 3 per cent commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio assuming that the commission will be paid. What effect does this have on the break-even point?

6. If the commission is paid as described in requirement 5, management expects sales revenues to increase by $80,000. Is it a sound decision to implement the commission? Support your answer with appropriate computations.

Reference no: EM132452885

Questions Cloud

BSBMKG609 Develop a marketing plan Assignment : BSBMKG609 Develop a marketing plan Assignment Help and Solution - What are your main organisational objectives and How can you evaluate the risks and returns
Discuss the case of goodwill impairment at jackson : Discuss about the Codification to Research a Complex Accounting Issue: The Case of Goodwill Impairment at Jackson Enterprises
Describe the paths of water through the hydrologic cycle : Describe the paths of water through the hydrologic cycle. Explain the processes and energy gains and losses involved in changes of water between its 3 states
What role do vows play in the life of a lay jain person : What role do vows play in the life of a lay Jain person and how do those vows affect their lives outside of the Jain community?
Compute the contribution margin ratio for Kiltop : Compute the contribution margin ratio for Kiltop. What volume of sales must be earned if Kiltop wants to earn an after-tax profit equal to 8 per cent of sales
Description of the steps involved in a process evaluation : Consider the reasons why process evaluation is important and specific situations in which a process evaluation is particularly useful.
Climate change and global warming : The current status of atmosphere with respect to climate change and global warming. Exploration of the impact for changes such as increase in ocean temperature
Find the number of units to produce a profit before tax : The following data relates to a company with a single product: Selling price per unit $200. The number of units to produce a profit before tax of $50 000 is
Discuss between corporate social responsibility and ethics : How does exercising Christian principles play a part in running a successful business while operating within state and federal regulations?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd