Homework answers / question archive / Wesley Company manufactures and sells a single product

Wesley Company manufactures and sells a single product

Accounting

Share With

---

Wesley Company manufactures and sells a single product. The company's income statement at sales level of 30,000 units for last quarter follows:

 

 TotalSales$300,000 Less: Variable expenses 180,000 Contribution margin 120,000 Less: Fixed expenses 56,000 Net operating income$64,000 

 

Required:

1. What is the monthly break-even point in units sold and in sales dollars? (Round your intermediate calculations and final answers to the nearest whole number.)

 

 

 

 

 

2. Without resorting to computations, calculate the total contribution margin at the break-even point for the quarter.

 

 

 

 

 

3-a. How many units would have to be sold each quarter to earn a target profit of $14,400? Use the formula method.

 

 

 

 

 

3-b. Verify your answer by preparing a contribution format income statement at the target level of sales.

 

 

 

 

 

4. Refer to the original data. Compute the company's margin of safety for the quarter in units, in dollars and as a percentage of last quarter's sales. (Round "Percentage" answer to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)

 

 

 

 

 

5. What is the company's CM ratio? If quarterly sales decrease by $12,000 and there is no change in fixed expenses, what would you expect the quarter's net operating income to be? ( an income statement; use the CM ratio to compute your answer.)