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PROBLEM 20.5A
SIMON TEGUH (concluded)
b.
30 Minutes, Strong PROBLEM 20.6A
PRECISION SYSTEMS
a. Variable costs per unit before 15% increase in the cost of
the variable costs of $63 per unit must equal 60%
of sales price after the wage increase.
Sales volume required to maintain current operating income:
Fixed Costs + Target Operating Income
Unit Contribution Margin
Sales Volume
35 Minutes, Strong PROBLEM 20.7A
PERCULA FARMS
a. Raising clownfish will result in the highest
operating income. Clownfish Angelfish
Number of salable fish 100,000 50,000
× sale price 4$ 10$
Total revenue 400,000$ 500,000$
Variable costs:
b.
c. and d.
Operating income with new filter material: Clownfish Angelfish
Number of salable fish 120,000 60,000
× sale price 4$ 10$
Total revenue 480,000$ 600,000$
The most important factors in determining operating income are survival rates, and the
costs of feeding and water changes.
Percula will earn the highest operating income by purchasing the new filter material and
raising angelfish.
PROBLEM 20.7A
PERCULA FARMS (concluded)
c. and d.
Operating income with new heating and lighting
equipment: Clownfish Angelfish
Number of salable fish 105,000 55,000
× sale price 4$ 10$
Total revenue 420,000$ 550,000$
PROBLEM 20.8A
LIFEFIT PRODUCTS
a. Contribution margins of product lines:
Shoes ($15 contribution margin ÷ $50 sales price) 30%
Shorts ($4 contribution margin ÷ $5 sales price) 80%
(2) Monthly operating income:
c. Assuming new sales mix (shoes, 70%; shorts, 30%)
(1) Average contribution margin ratio:
(3) Monthly break-even sales volume (in dollars):
35 Minutes, Strong
PROBLEM 20.8A
LIFELIFT PRODUCTS (concluded)
d. In the new sales mix, increased sales of shorts have replaced some sales of shoes. Shorts
have a much higher contribution margin than shoes. Thus, at a given sales volume, selling
SOLUTIONS TO PROBLEMS SET B
25 Minutes, Medium PROBLEM 20.1B
NATHE, INC.
a. Required contribution margin per unit
Budgeted operating Income 200,000$
Fixed costs 600,000
Total required contribution margin 800,000$
$20
= 30,000 units
c. Margin of safety at 40,000 units:
Sales volume at 40,000 units ($100 x 40,000) 4,000,000$
Less: Break-even sales volume ($100 x $30,000) 3,000,000
Margin of safety 1,000,000$
PROBLEM 20.1B
NATHE, INC. (concluded)
d.
$600,000
Yes. With a unit sales price of $96, the break-even sales volume is 37,500 units:
Unit contribution margin = $96 - $80 variable costs = $16
25 Minutes, Medium PROBLEM 20.2B
SNUG-AS-A-BUG
a. Sales price per unit:
Budgeted costs 4,800,000$
(3) Unit contribution margin:
a.
30 Minutes, Medium
PROBLEM 20.3B
MOOR-N-MORE
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