Computation of contribution margin ratio

Assignment Help Financial Accounting
Reference no: EM1314958

Computation of contribution margin Ratio, BEP, and margin of Safety.

Aunt Pitty's Pies is a small bakery that sells its products to local restaurants and supermarkets. The Bakery's most recent income statement is as follows:

Sales

$78,000

Variable Costs

$24,960

Contribution Margin

$53,040

Fixed costs

$29,240

Net Income

$23,800

1. What is Aunt Pitty's Contribution Margin Ratio?

2. What is Aunt Pitty's breakeven level of sales revenues?

3. What is auto Pitty's Margin of Safety in the most recent year?

4. Assume that Aunt Pitty's is considering investing in new machinery that will decrease variable costs per unit by 10%. In order to achieve the savings, the bakery's fixed costs would increase by $6,360. What will happen to the breakeven level of sales revenues? You must give a specific numerical answer.

(NOTE: The Sales price will NOT change).

Reference no: EM1314958

Questions Cloud

This pendulum take for one oscillation : A pendulum of length 1.5 m is held out to point A. At the vertical position, an overhang effectively cuts the length of the pendulum by an amount equal to 1.09 m. (That is, 1.0 m is no longer free to swing.) How long does this pendulum take for one o..
What price should the firm charge to realize the targeted : Illustrate what price should the firm charge to realize the targeted profit. Illustrate what would be its (cost-based) markup ratio.
Computation of value of the bond : Computation of value of the bond and The current yield on a bond worth $900 with a par value of $1000 and a coupon rate of 10% is
Explaining the concept of bioremediatio : Explain bioremediation in detail. Write an essay on the bioremediation.
Computation of contribution margin ratio : Computation of contribution margin Ratio, BEP, and margin of Safety and Find Aunt Pitty's breakeven level of sales revenues and determine auto Pitty's Margin of Safety in the most recent year?
Estimating regression equation using stepwise regression : A researcher used stepwise regression to create regression models to predict  Birth-Rate  (births per1000) using five predictors:
Number of firms in monopolistically competitive industry : All firms in a Cournot monopolistically competitive industry have the same cost function C (q)= 25 + 10q. Compute the equilibrium price, total output, firm output and number of firms in the industry.
What are the magnitudes of fac and fad : A state highway patrol car radar unit uses a frequency of 8.00×10^9Hz. What frequency difference will the unit detect from a car receding at the speed of 44.50 from a stationary patrol car.
Computation of shares of common stock and cash dividends : Computation of shares of common stock and cash dividends and what new cash dividend per share amount will result in the same total dividend income as you received before the stock split

Reviews

Write a Review

Financial Accounting Questions & Answers

  Purpose a schedule of expected cash collections

Purpose a schedule of expected cash collections from sales, by month and in total, for the second quarter

  Global reporting initiative

Determine your company performance in relation to GRI standards and comment on Stigler's theory.

  Evaluate andreas basis in the partnership interest

Evaluate Andreas basis in the partnership interest at the starting of the year

  Common size income statement

Prepare a two column common size income statement and Comment specifically on difference between Camper's, Inc., and the industry average.

  Evaluate the price of a bond and total value of the bonds

Compute the price of a bond and Compute the total value of the 90 bonds.

  Determine bemis''s internal control system

Evaluation of Internal Control criteria and determine Bemis's internal control system and indicate which principles of internal control appear to have been ignored

  Stockholders equity and revenue

Classification of items  - Classify each of the above accounts as an asset (A), liability (L), stockholders' equity (SE), revenue (R), or expense (E) item.

  Determine the costs per equivalent unit

Assume that the company uses the weighted-average method. Determine the costs per equivalent unit for June for the first process.

  Determine the transfer price per pound of recycled aluminum

Determine the transfer price per pound of recycled aluminum. Consider that each division is considered a profit center; could the fabrication manager decide to purchase 10,000 pounds next month from Metalife?

  Simple capital structure

Assuming that Susan has a marginal tax rate of 30%, the net effect of her having this hobby will be to increase her total tax liability by:

  Valuation of ending work-in process

Valuation of Ending Work-in Process using process costing  - equivalent unit of production for conversion using the weighted average method

  United business forms'' weighted average cost of capital

Recalculate United Business Forms' weighted average cost of capital. Which plan is optimal in terms of minimizing the weighted average cost of capital?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd