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    Solution For Chapter 22 - Part2

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    Dương Xuân Đạt
    The document contains information about contribution margin, break-even point, and margin of safety calculations for various companies. It provides the unit selling price, unit variable costs, fixed costs, contribution margin per unit, break-even point in units and dollars, and margin of safety in units and dollars for each scenario. The key metrics like contribution margin, break-even point, and margin of safety are calculated and compared for different products and companies.

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    Solution For Chapter 22 - Part2

    Uploaded by

    Dương Xuân Đạt
    32 views4 pages
    The document contains information about contribution margin, break-even point, and margin of safety calculations for various companies. It provides the unit selling price, unit variable costs, fixed costs, contribution margin per unit, break-even point in units and dollars, and margin of safety in units and dollars for each scenario. The key metrics like contribution margin, break-even point, and margin of safety are calculated and compared for different products and companies.

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    Solution-for-Chapter-22_part2

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    The document contains information about contribution margin, break-even point, and margin of safety calculations for various companies. It provides the unit selling price, unit variable costs, fixed costs, contribution margin per unit, break-even point in units and dollars, and margin of safety in units and dollars for each scenario. The key metrics like contribution margin, break-even point, and margin of safety are calculated and compared for different products and companies.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    32 views4 pages

    Solution For Chapter 22 - Part2

    Uploaded by

    Dương Xuân Đạt
    The document contains information about contribution margin, break-even point, and margin of safety calculations for various companies. It provides the unit selling price, unit variable costs, fixed costs, contribution margin per unit, break-even point in units and dollars, and margin of safety in units and dollars for each scenario. The key metrics like contribution margin, break-even point, and margin of safety are calculated and compared for different products and companies.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 4

    E22.

    Contribution margin per unit = unit selling price – unit variable costs = 60 – (12 + 10 + 2) = 36

    BEP in units = fixed cost / contribution margin per unit = (1400 + 200 + 2000) / 36 = 100 lawns

    Contribution margin ratio = CMP unit / unit selling price = 36 / 60 * 100 = 60%

    BEP in dollars = fixed cost / contribution margin ratio = (1400 + 200 + 2000) / 60% = 6000 dollars

    E22.13

    a. Unit contribution margin = unit selling price – unit variable costs = 400 – 280 = 120
    b. BILLINGS COMPANY
    CVP Income Statement
    For the month ended September 30, 2020

    c. Break-even point in units = fixed cost / CMP unit = 54000 / 120 = 450
    d. BILLINGS COMPANY
    CVP Income Statement
    For the month ended September 30, 2020

    E22.14

    a. Unit contribution margin = 150 – 90 = 60


    BEP in units = fixed cost / CMP = 570000/60 = 9500
    Profit in 2019 = 60Q = 210000 => Q = 210000/60 = 3500
    Number of units sold in 2019 = 3500 + 9500 = 13000
    b. Number of units sold in 2020 to reach the stockholders’ desired profit level:
    Required sales in units = fixed cost + net income in 2020 / CMP = 832000 / 60 = 13867
    c. Sales in 2020 = variable costs + fixed costs + net income 2020
     (13000 * 90) + 570000 + 262000 = 1170000 + 570000 + 262000 = 2002000
     Selling price per unit = 2002000 / 13000 = 154

    E22.15

    Variable costs per unit = 240000/5000 = 48

    Price per unit = 400000 / 5000 = 80

    Contribution margin = Sales – variable cost = 400000 – 240000 = 160000

    Net income = contribution margin – fixed costs = 160000 – 90000 = 70000

    Quantity 5000
    sales 400000
    Total Variable costs 240000
    Fixed costs 90000

    Selling price per unit 80


    Variable costs per unit 48
    Net Income 70000

    a. Increase selling price by 10%

     80 + 10% = 88
     Sales = 88 * 5000 = 440000
     Contribution margin = sales – variable costs = 440000 – 240000 = 200000
     Net income = contribution margin – fixed cost = 200000 – 90000 = 110000

    Price 88
    Sales 440000
    Net Income 110000

    2) Reduce variable costs to 55% of sales

    Variable cost = 400000 * 55% = 220000


    Contribution margin = sales – variable cost = 400000
    – 220000 = 180000
    Net income = contribution margin – fixed costs =
    180000 – 90000 = 90000

    Total variable costs 220000


    Net Income 90000

     Action A produce higher net income

    E22.17

    Sales: 2,500 units

    Sales price: $40 per unit

    Variable costs: $24 per unit

    Fixed costs: $19,500

    a. Contribution margin per unit = sales – variable costs = 40 – 24 = 16


    Contribution margin ratio = CMP unit / sales = 16 / 40 * 100 = 40%
    b. BEP in unit = fixed costs / CMP unit = 19500 / 16 = 1219
    BEP in dollars = fixed costs / CMR = 19500 / 40% = 48750
    c. Margin of safety in dollars = Actual (expected sales) – break-even sales = (2500 * 40) – 48750 =
    51250
    Margin of safety in ratio = margin of safety in dollars / actual (expected sales) = 51250 /
    (2500*40) * 100 = 51250 / 100000 * 100 = 51.25%
    d. Total dollar contribution margin = 16 * 2500 = 40000
    Increase sales if contribution margin increases by 30% = 40000 * 30% = 12000

    P22.3A

    a.
    b. Contribution margin per unit = sales – variable cost = 0.5 – (1260000/3600000) = 0.5 – 0.35 =
    0.15
    Contribution margin per unit = contribution margin / total quantities of the product =
    540000/3600000 = 0.15
    Contribution margin ratio = CMP unit / sales * 100 = 0.15 / 0.5 * 100 = 30
    BEP in unit = fixed costs / CMP = 405000 / 0.15 = 2700000
    BEP in dollars = fixed costs / CMR = 405000 / 30% = 1350000
    c. Margin of safety in dollars = Actual (expected sales) – break-even sales = 1800000 – 1350000 =
    450000
    Margin of safety ratio = MoS ($) / Actual (expected sales) = 450000 / 1800000 * 100 = 25
    d. Required sales in dollars = (fixed costs + targeted net income) / CMR = (405000 + 180000) / 30
    = 1950000

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