ACC – Pringle Company

\$12.00

Category:

Description

Sales
Variable Expenses
Contribution margin
Fixed Expenses
Net operating income

Total
Per Unit
\$600,000.00
\$40.00
\$420,000
28
\$180,000.00
\$12.00
\$150,000
\$30,000.00

1
Unit sales to break even
Unit sales in dollars

12500
500000

2
3 18000=\$12xQ-\$150,000
12xQ=\$18,000+150,000=168,000
168000/12
14,000 need to be sold
4 Sales
Break even sales
Margin in Safety \$\$
Margin safety %
5 CM Ratio
Sales
Variable Expenses
Contribution margin
Fixed Expenses
Net operating income

600,000
500,000
100,000
16.67%
30.00%
Present
Expected Increase
\$600,000.00 \$680,000 \$80,000.00
\$420,000 \$476,000 \$56,000.00
\$180,000.00 \$204,000 \$24,000.00
\$150,000 \$150,000
\$0.00
\$30,000.00
\$54,000 \$24,000.00

Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:

Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:
p. 216

Required:
1. What is the monthly break-even point in units sold and in sales dollars?
Without resorting to computations, what is the total contribution margin at the break-even point?
How many units would have to be sold each month to earn a target profit of \$18,000? Use the formula method. Verify your answer by preparing a contribution format income statement at the target level of sales.
Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms.What is the company’s CM ratio? If monthly sales increase by \$80,000 and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?

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ACC – Pringle Company

\$13.00

Category:

Description

Sales
Variable Expenses
Contribution margin
Fixed Expenses
Net operating income

Total
Per Unit
\$600,000.00
\$40.00
\$420,000
28
\$180,000.00
\$12.00
\$150,000
\$30,000.00

1
Unit sales to break even
Unit sales in dollars

12500
500000

2
3 18000=\$12xQ-\$150,000
12xQ=\$18,000+150,000=168,000
168000/12
14,000 need to be sold
4 Sales
Break even sales
Margin in Safety \$\$
Margin safety %
5 CM Ratio
Sales
Variable Expenses
Contribution margin
Fixed Expenses
Net operating income

600,000
500,000
100,000
16.67%
30.00%
Present
Expected Increase
\$600,000.00 \$680,000 \$80,000.00
\$420,000 \$476,000 \$56,000.00
\$180,000.00 \$204,000 \$24,000.00
\$150,000 \$150,000
\$0.00
\$30,000.00
\$54,000 \$24,000.00

Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:

Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:
p. 216

Required:
1. What is the monthly break-even point in units sold and in sales dollars?
Without resorting to computations, what is the total contribution margin at the break-even point?
How many units would have to be sold each month to earn a target profit of \$18,000? Use the formula method. Verify your answer by preparing a contribution format income statement at the target level of sales.
Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms.What is the company’s CM ratio? If monthly sales increase by \$80,000 and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?

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There are no reviews yet.