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Margin income statement to calculate contribution margin

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Reference no: EM131213642

Casper Karts manufactures a three-wheeled shopping cart that sells for $60. Variable cost per shopping cart is $45. Annual fixed cost is $975,000. Casper Kart sold 80,000 shopping carts in this year.

  1. Please use the format of a contribution margin income statement to calculate the contribution margin (in dollars), unit contribution, and contribution margin ratio for Casper Karts. You can refer to Example 1 in the textbook.
  2. What will be the break-even point in units and in dollars if we assume that Casper Karts sells this product (the three-wheeled shopping cart) only?
  3. Please draw the break-even and profit-volume charts in Excel. You will create a few data points to draw graphs. Please refer to Exhibits 4.1 and 4.2 in the textbook. Please add a chart title, specify the lines and units on vertical and horizontal axes, and the numbers on the horizontal axis should align with each tick mark.
  4. How many units must the company sell to earn a pre-tax income of $900,000?
  5. If the company's tax rate is 40 percent, how many units must be sold to earn an after-tax profit of $750,000?
  6. What is the company's margin of safety based on the sales of 80,000 shopping carts?
  7. Assume that there is no change in fixed costs. What will be the expected net income if this company has the sales revenue of $5,700,000?

Reference no: EM131213642

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