﻿CHAPTER 3

PROFITABILITY EVALUATION AND ORGANIZING

Exercise 3-3

a. Revenue \$800, 500

Variable costs (380, 000)

Contribution perimeter \$420, 500

Contribution perimeter ratio = \$420, 000/\$800, 000 sama dengan 0. 525

Annual break-even dollar product sales volume sama dengan \$210, 000/0. 525 = \$400, 500 b. Gross annual margin of safety in dollars:

Sales hundreds of dollars, 000

Break-even sales dollars (400, 000)

Margin of safety \$400, 000

c. To determine the varying and total costs lines, it is necessary to calculate the changing cost proportion:

Variable = variable costs = \$380, 000 = 0. 475

cost percentage sales hundreds of dollars, 000

For a volume of \$1, 500, 000 product sales dollars, variable costs will be \$475, 500.

d. Revised annual break-even dollar revenue:

(\$210, 1000 + \$52, 500)/0. 525 = \$250, 000

Work out 3-8

a. Contribution margin \$380, 000

Sales 950, 000

Contribution margin ratio 0. forty

Break-even reason for sales dollars = \$190, 000/0. forty

= \$475, 000

m. Current product sales \$950, 000

Break-even sales (475, 000)

Margin of safety \$475, 000

c. Current fixed costs \$190, 000

Influence of increase 50, 500

New set costs \$240, 000

Modified break-even stage = \$240, 000/0. forty

= \$600, 000

g. Required before-tax income = \$200, 000/(1  zero. 36)

= \$312, five-hundred

Sales volume level required to provide an after-tax cash flow of \$200, 000: (\$190, 000 + \$312, 500)/0. 40 = \$1, 256, 250

at the. Sales \$1, 256, two hundred fifity Variable costs (60% of sales) (753, 750) Contribution margin (40% of sales) \$ 502, 500 Fixed costs (190, 000) Net gain before fees \$ 312, 500 Income taxes (36%) (112, 500) Net gain after taxation \$ 200, 000 Problem 3-16

Once the subsequent, or a comparable, format is made, each circumstance is fixed by completing the presented information and working toward the unknowns.

Case 1Case 2 Circumstance 3 Case 4

Product sales you, 000 800 4, 300? * 3, 000? 2.

Sales revenue\$20, 000 \$ 1, six-hundred? \$137, six-hundred? \$60, 500

Variable costs:

Unit\$ 10\$ 1\$ 12\$ 5?

Unit sales you, 000  800  4, 300  3, 000? Total ( twelve, 000) (800) (51, six-hundred 15, 500? Contribution margin\$10, 000? \$ 800\$ eighty six, 000? \$45, 000?

Set costs (8, 000) (400)? (80, 000) (30, 000)? Net income \$ 2, 000? \$ 4 hundred \$ six, 000? #\$15, 000? #

Unit cont. margin:

Cont. margin\$10, 1000? \$ 800\$86, 000? \$45, 000?

Product sales  1, 500  800  some, 300?  3, 000? Unit contribution\$ 10? dollar 1? bucks 20? \$ 15

Break-even point:

Set costs\$8, 000\$ 400\$ eighty, 000\$30, 500?

Unit cont. margin \$12?  \$1?  20 dollars?  \$15 Unit break-even point 800? 400? four, 000 2, 000

Perimeter of protection (unit

sales less unit break-

also point) 2 hundred? 400? 300 1, 000

*Solved because the unit break-even point plus the margin of safety. #Solved as the machine contribution perimeter times margin of safety. Problem 3-19

a. Just before solving this matter it is necessary to determine the varying costs every unit, the fixed costs per year, plus the unit selling price.

Using the high-low method:

Varying costs

every unit sama dengan (\$90, 1000  \$75, 000)/(8, 1000  your five, 000) = \$5

Set costs...