Stylish sittling is a retailer of office chairs located San Francisco, Californi
ID: 2461237 • Letter: S
Question
Stylish sittling is a retailer of office chairs located San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. The annual breakeven point in dollar sales, is: $1,300,000. $1,500,000. $1,100,000. The master budget for a given accounting period has all of the following except: A It consists of a series of operating and financial budgets. It is considered the "grand plan of action" for the upcoming period. It culminates in a set of pro forma financial statements. It is considered an important planning document for many organizations. It is based on the actual level of sales activity for the period.Explanation / Answer
10)
Correct Answer is E. $1,800,000
Break Even Points in dollars = Total Fixed Cost / Contribution Margin Ratio
Contribution Per Unit = Sale Price per unit – Variable Cost Per Unit = $75 - $60 = $15
Contribution margin Ratio = Contribution Margin Per Unit / Sales Price Per Unit x 100 = $15 / $75 x 100 = 20%
Total Fixed Cost (given in the question) = $360,000
Break Even Points in dollars = $360,000 / 20% = $1,800,000
11)
Correct Answer is E.
The master budget for a given accounting period has all of the following excepts ----- It is based on the actual level of sales activity for the period.
The Master Budget is prepared on predetermined basis. It is prepared at the beginning of the period hence it cannot be based on the actual level of sales activity for the period because actual level of activity is known by the company when they actual selling the units.