Reference no: EM133052613

Question 1 - Cellular Montana Alta is a business managed by Maneco and Viroldo. The average sales price of cell phones is $ 765.00. The average variable cost per unit is $ 255. For each unit sold, sellers are paid 10% commissions of the sales price. Total store fixed costs are $ 37,250 per month.

Required -

a. What is the contribution margin for cell phones in dollars and in percentages?

b. What is the tie point per month in units; in units?

c. How many units do you have to sell in the month if you want an income before contributions of $ 27,500?

d. Consider a tax rate of 35%. If you want a Net Income of $ 40,000. How many units and dollars of income do you need to sell?

Question 2 - Previous follow-up. Cellular Montana Alta is a business managed by Maneco and Viroldo.

Cell phones want to expand business lines. In addition to the cell phones sold above, consider selling cell phone accessories. They add cases and ultra fast chargers with regular sales prices of $35.00 for the cases and $50.00 for the chargers, with variable costs of $17.50 and $18.25 respectively and a special commission for sellers of 15% on the price of the accessories.

Required -

a. The next Black Friday in a promotional sale that costs $2,500 in promotion additional to those indicated in origin. They are projected to sell 180 cell phones, but at a special price of $500.00; 60 cases and 40 chargers, with a 10% discount from their original price. Consider the promotion cost as fixed. Determine operating income if all projected items are sold.

b. Same, but consider promotion costs as variable costs. Calculate the operating income under this condition.

c. Which one suits you better, a or b?

d. Determine the tie point in units and dollars for each of the products using the given ratio.

e. If the proportion were 150 cell phones, 75 cases and 50 chargers, determine the tie point in units and in dollars for each product.