Illustrate what is the industry''s breakeven point in sales

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Reference no: EM13110922

Q. 1. Travellers aid most recent income statement follows:
Total Per unit
Sales (3000 units) $90,000 $30.00
Variables expenses $54,000 $18.00
Contribution margin $36,000 $12.00
Fixed expenses $22,000
Net operating income $14,000
Prepare a new contribution format income statement under the following condition:
The sales volume increases by 150 units. (New sales are 3,150 units)

2. House wares Inc. distributes a single product, food processors whose selling price is $200.00 and whose variable cost is $140.00 per unit. The industry's monthly fixed expense is $18,000.

a. Illustrate what is the industry's breakeven point in unit sales using the equation method? Show calculations.

b. Illustrate what is the industry's breakeven point in sales dollars using the contribution margin with the CM ratio? Show calculations.

3. Strong Wood Industry is a distributor of patio furniture. Data concerning the next month's budget appear below:

Selling price $ 290 per unit
Variable expenses $ 174 per unit
Fixed expenses $ 158,000 per month
Unit sales 1,500 units per month

a. Illustrate what is the industry's margin of safety? Show calculations.

b. Illustrate what is the industry's margin of safety as a percentage of sales? Show calculations.

Reference no: EM13110922

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