Ex. 20.14 a. Vests Skis Ropes
Unit selling prices $120 $300 $50
Unit variable costs (60) (210) (10)
Unit contribution margins $60 $90 $40
Ex. 20.15 a.
b. $975,000 = Monthly Fixed Costs
($40 × 19,250 DLH)
Monthly Fixed Costs = $975,000 – $770,000 = $205,000
that shifts the sales mix away from the products with the lowest contribution
margin ratios (vests and skis) to the product with the highest contribution
margin ratio (ropes).
($975,000 – $700,000) ÷ (19,250 DLH – $12,375 DLH) = $40 per DLH
SOLUTIONS TO PROBLEMS SET
A
25 Minutes, Easy PROBLEM 20.1
A
IONIC CHARGE
a. Required contribution margin per unit
Budgeted operating Income 700,000$
c. Margin of safety at 60,000 units:
Sales volume at 60,000 units ($75 × 60,000 units) 4,500,000$
Less: Break-even sales volume ($75 × $32,000 units) 2,400,000
Margin of safety 2,100,000$
PROBLEM 20.1A
IONIC CHARGE (concluded)
d.
No. With a unit sales price of $60, the break-even sales volume is 80,000 units:
Unit contribution margin = $60 – $50 variable costs = $10
25 Minutes, Medium PROBLEM 20.2A
BLASTER CORPORATION
a. Sales price per unit:
Budgeted costs 2,250,000$
Add: Budgeted operating incom
e
900,000
(2) Variable costs and expenses per pair of boots:
Direct materials 21$
(3) Contribution margin per pair of boots:
PROBLEM 20.3A
STOP-N-SHOP
a.
30 Minutes, Medium
PROBLEM 20.3A
STOP-N-SHOP (continued)
The following information is used for parts b. and c. of this problem.
Operating data:
Revenue per parking-space hour 50 cents
Variable costs per parking-space hour 5 cents
Fixed costs per year:
PROBLEM 20.3
A
STOP-N-SHOP (concluded)
b. Contribution margin ratio:
Parking charge per hour 0.50$
Less: Variable costs per unit 0.05
Contribution margin per unit 0.45$
Contribution margin ratio ($0.45 ÷ $0.50) 90%
Break-even sales volume:
c. (1) New contribution margin ratio per parking-space hour:
Parking charge per hour 0.50$
Less: Variable costs ($0.05 + $0.15) 0.20
Contribution margin per unit 0.30$
New contribution margin ratio ($0.30 ÷ $0.50) 60%
(2) Required sales revenue to produce desired operating
PROBLEM 20.4
A
RAINBOW PAINT
S
a. Contribution margin ratio:
Unit sales price 10$
Less: Variable costs per unit 6
Contribution margin per gallon 4$
Contribution margin ratio ($4 ÷ 10, the unit sales price) 40%
b. On the following page.
c. Projected operating income at various levels: 2,200 Gallons 2,600 Gallons
30 Minutes, Medium
PROBLEM 20.4A
RAINBOW PAINTS (concluded)
b.
40 Minutes, Strong PROBLEM 20.5
A
SIMON TEGUH
a. Unit contribution margin:
Sales price per unit 0.75$
Less: Variable costs per unit:
Merchandise 0.25$
Rental commission 0.05 0.30
Unit contribution margin 0.45$
Break-even volume in units:
b. See following page.
c. Sales volume to produce operating income equal to 30%
return on investment:
Sales volume in dollars (8,500 units × $0.75 per unit) 6,375$