Carol Ann\'s Shoe Store Income Statement For the Month Ended April 30, 200X Sale
ID: 2499595 • Letter: C
Question
Carol Ann's Shoe Store
Income Statement
For the Month Ended April 30, 200X
Sales $68,000
Less: Variable Costs -
Cost of Goods Sold $40,000
Selling Expense 4,600
Administrative Expense 3,000
Total Variable Costs (47,600)
Contribution Margin 20,400
Less: Fixed Costs -
Selling Expense $ 5,900
Administrative Expense 9,000
Total Fixed Costs (14,900)
Operating Income $ 5,500
During the month of April, Carol Ann sold 5,000 pairs of shoes.
Refer to the information above for Carol Ann's Shoe Store. The contribution margin ratio is
58.33%
8.09%
30.00%
41.67%
Carol Ann's Shoe Store
Income Statement
For the Month Ended April 30, 200X
Sales $68,000
Less: Variable Costs -
Cost of Goods Sold $40,000
Selling Expense 4,600
Administrative Expense 3,000
Total Variable Costs (47,600)
Contribution Margin 20,400
Less: Fixed Costs -
Selling Expense $ 5,900
Administrative Expense 9,000
Total Fixed Costs (14,900)
Operating Income $ 5,500
During the month of April, Carol Ann sold 5,000 pairs of shoes.
Refer to the information above for Carol Ann's Shoe Store. The required sales in dollars to break even is
$62,500
$49,667
$35,500
$35,300
The calculation of the payback period for an investment when net cash flow is even (equal) is:
Cost of investment/Annual net cash flow
Annual net cash flow/Cost of investment
Total net cash flow/Cost of investment
Total net cash flow/Annual net cash flow
58.33%
8.09%
30.00%
41.67%
Explanation / Answer
1)
contribution margin ratio = Contribution Margin/Sale
contribution margin ratio = 20400/68000
contribution margin ratio =30%
Answer
30%
2)
contribution margin ratio = Contribution Margin/Sale
contribution margin ratio = 20400/68000
contribution margin ratio =30%
Required sales in dollars to break even = Fixed Cost /contribution margin ratio
Required sales in dollars to break even = 14900/30%
Required sales in dollars to break even = $49,667
Answer
$49,667
3)
Answer
Cost of investment/Annual net cash flow
Note : Payback period = Cost of investment/Annual net cash flow