117.Stan Todd, Inc. wants to manufacture a new cell phone that can be worn on the wrist. Information from doing market research shows that he can sell this phone for $25 each. His fixed costs would be...





117.Stan Todd, Inc. wants to manufacture a new cell phone that can be worn on the wrist. Information from doing market research shows that he can sell this phone for $25 each. His fixed costs would be $145,000 a year and variable costs would amount to $10 per phone.


(1) What would the contribution margin ratio be?
(2) What sales volume in units would Stan need to break-even?
(3) What sales volume in units would Stan need to earn $200,000 profit?
(4) What would be the margin of safety if he sold 25,000 units (use the information calculated in #2)?












118.Cost-volume-profit analysis


Diana Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price, and fixed costs are $8,400 a month.


Management decides to decrease the selling price from $160 to $145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.


(a) At the original selling price of $160 a unit, what is the contribution margin ratio? _______________%
(b) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to break-even? (Round your answer to the nearest whole dollar) $_______________
(c) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to earn a monthly operating income of $6,500? (Round your answer to the nearest whole dollar) $________________
(d) At the reduced selling price of $145 a unit, what is the contribution margin ratio? _______________%
(e) At the reduced selling price of $145 a unit, what dollar volume of sales per month is required to break-even? (Round your intermediate percentage to one decimal place and final answer to the nearest whole dollar) $_______________














May 15, 2022
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