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PROBLEM 20.3B
MOOR-N-MORE (continued)
The following information is used for parts b. and c. of this problem.
Operating data:
Revenue per mooring-space hour 5$
Variable costs per mooring-space hour 10 cents
PROBLEM 20.3B
MOOR-N-MORE (concluded)
Break-even sales volume:
c.
(
1
)
New contribution mar
g
in ratio
p
er
p
arkin
g
-s
p
ace hour:
Moorin
g
char
g
e
p
er hour 5.00$
Less: Variable costs
(
$0.10 + $0.20
)
0.30
Contribution mar
g
in
p
er uni
t
4.70$
New contribution mar
g
in ratio
(
$4.70 ÷ $5.00
)
94%
(
2
)
Re
q
uired sales revenue to
p
roduce desired
30 Minutes, Medium PROBLEM 20.4B
GREEN THUMB
a. Contribution margin ratio:
Unit sales price 20$
Less: Variable costs per unit 12
Contribution margin per bag 8$
Contribution margin ratio ($8 ÷ $20) 40%
Break-even sales volume in dollars:
b. On the following page.
PROBLEM 20.4B
GREEN THUMB (concluded)
b.
GREEN THUMB
Cost-Volume-Profit Graph
Monthly Basis
40 Minutes, Strong PROBLEM 20.5B
ED WINSLOW
a. Unit contribution margin:
Sales price per unit 3.20$
Less:
V
ariable costs per unit:
Merchandise 1.10$
Rental commission 0.10 1.20
Unit contribution margin 2.00$
Break-even volume in units:
b. See following page.
c. Sales volume to produce operating income equal to 12
%
return on investment:
PROBLEM 20.5B
ED WINSLOW (concluded)
b.
ED WINSLOW
Cost-Volume-Profit Chart
30 Minutes, Strong PROBLEM 20.6B
ELECTRO SYSTEMS
a. Variable costs per unit before 20% increase in the cost
of direct labor 6.00$
Increase in cost of direct labor, 20% of $1.00 0.20
Variable costs and expenses per unit
after 20% increase in the cost of direct labor 6.20$
Because the contribution margin ratio of 60% is
required, the variable costs of $6.20 per unit must
equal 40% of sales price after the wage increase.
Sales Volume
Sales volume required to maintain current operating income:
Fixed Costs + Target Operating
Unit Contribution Margin
35 Minutes, Strong PROBLEM 20.7B
DORSAL RANCH
a. Raising cod will result in the highest
operating income. Cod Salmon
Number of salable fish 300,000 200,000
× sale price 5$ 9$
Total revenue 1,500,000$ 1,800,000$
b.
c. and d.
Operating income with new filter material: Cod Salmon
Number of salable fish 400,000 280,000
× sale price 5$ 9$
Total revenue 2,000,000$ 2,520,000$
Variable costs:
The most important factors in determining operating income are survival rates, and
the costs of feeding and water changes.
