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  • Tutori AL 7.51: in Azma N CEA140 083 Amad S Huib Ce A14013 1

    Uploaded by

    Syafina Atiqah
    4 views8 pages
    This document provides information about two ski models - touring and mountaineering - that a company produces. It then asks and solves five quantitative questions related to costs, sales, contribution margins, and break-even points for the different models. The summaries include computing the contribution margin ratio for the mountaineering model (34%), determining the number of mountaineering skis that need to be sold to achieve a target profit (12,500 units), finding the variable cost change needed for the mountaineering model to have the same break-even point as the touring model ($71.28/unit), and calculating the new break-even point if variable and fixed costs for the mountaineering model change (10,729 units).

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    This document provides information about two ski models - touring and mountaineering - that a company produces. It then asks and solves five quantitative questions related to costs, sales, contribution margins, and break-even points for the different models. The summaries include computing the contribution margin ratio for the mountaineering model (34%), determining the number of mountaineering skis that need to be sold to achieve a target profit (12,500 units), finding the variable cost change needed for the mountaineering model to have the same break-even point as the touring model ($71.28/unit), and calculating the new break-even point if variable and fixed costs for the mountaineering model change (10,729 units).

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    4 views8 pages

    Tutori AL 7.51: in Azma N CEA140 083 Amad S Huib Ce A14013 1

    Uploaded by

    Syafina Atiqah
    This document provides information about two ski models - touring and mountaineering - that a company produces. It then asks and solves five quantitative questions related to costs, sales, contribution margins, and break-even points for the different models. The summaries include computing the contribution margin ratio for the mountaineering model (34%), determining the number of mountaineering skis that need to be sold to achieve a target profit (12,500 units), finding the variable cost change needed for the mountaineering model to have the same break-even point as the touring model ($71.28/unit), and calculating the new break-even point if variable and fixed costs for the mountaineering model change (10,729 units).

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Information given

    Touring
    $132.00

    Model
    Mountaineering
    $120.00

    Selling price
    /unit
    Variable cost
    $79.20
    $79.20
    /unit
    The firm will be able to produce up to 15000 pairs

    The sales department assures management that it can

    sell between 9000 and 13000 units of either product this yea
    Fixed cost : $554,400.00 ( touring model )
    Fixed cost : $475,200.00 ( mountaineering model )

    Q1. Compute the contribution margin ratio for


    the mountaineering model.

    - Unit contribution margin ratio : unit


    contribution margin/unit sale price
    : $40.80 / $120
    Answer : 0.34 (34%)
    - Unit contribution margin : selling price/unit
    variable cost/unit
    : $120.00 - $79.20
    Answer : $40.80

    Q2. If Great Nothern Ski Company desires an


    after tax net income of $33,120.00, how many
    pairs of mountaineering skis will the company
    have to sell?
    Sales revenue variable expenses fixed
    expenses : profit
    ( $120 x X ) ( $79.20 x X ) - $475,200.00 :
    $33,120.00
    120X 79.20X - $475,200.00 :
    $33,120.00
    40.80X :
    $508,320.00

    Q3. How much would the variable cost per unit


    of mountaineering model have to change before
    it had the same break even point in units as the
    touring model ?
    Break even point : fixed expense/unit contribution
    margin
    : 554,400.00 / ($132.00 $79.20)
    : 10,500 units
    10,500 units : 475,200.00 / ($120.00 X)
    1260000 10,500X : 475,200.00

    Q4. Suppose the variable cost per unit of the


    mountaineering skis decreases by 10 percent,
    and the total fixed cost of mountaineering skis
    increases by 10 percent. Compute the new break
    even point
    Variable cost : $79.20 ( 10% x $79.20 )
    : $71.28
    Fixed cost: $475,200.00 + ( 10% x
    475,200.00)
    : $522,720.00

    ( $120 x X ) ( $71.28 x X ) - $522,720.00 : 0


    120X 71.28X - $522,720.00 : 0
    48.72X :
    $522,720.00
    X:
    10,729 units

    Q5. Suppose management decided to produce


    both products. If the two models are sold in
    equal proportions, and total fixed costs amount
    to $514,800, what is the firms break-even point
    in units

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