Miller Metal Co. makes a single product that sells for $45 per unit. Variable co
ID: 2500454 • Letter: M
Question
Miller Metal Co. makes a single product that sells for $45 per unit. Variable costs are $27.6 per unit, and fixed costs total $65,395 per month. A. Calculate the number of units that must be sold each month for the firm to break even. (Do not Round your immediate calculations). Break even volume _____?______ units.B. Assume current sales are $403,000. Calculate the margin of safety and the margin of safety ratio. Margin of safety _____?_____ Margin of safety ratio ______?_____%
C. Calculate operating income of $5,300 units are sold in a month. (Do not round your intermediate calculations.) Operating income _____?_____
D. Calculate operating income of the selling price is raised to $48 per unit, advertising expenditures are increased by $7,500 per month and monthly unit sales volume becomes 6,000 units. (Do not Round your immediate calculations). Operating income _____?______
E. Assume that the firm adds another product to its product line and that the new product sales for $21 per unit has variable cost $14 per unit and causes fixed expenses in total to increase to $89,000 per month. Calculate the firms operating income of 5,300 units of the original product and 4,800 units of the given in the problem statement. (Do not round your intermediate calculations.) Operating income _______?_______
F. Calculate the firms operating income if 3,900 units of the original product and 6,200 units of the new products are sold each month. (Do not round your intermediate calculations.) Operating income _______?_______
Miller Metal Co. makes a single product that sells for $45 per unit. Variable costs are $27.6 per unit, and fixed costs total $65,395 per month. A. Calculate the number of units that must be sold each month for the firm to break even. (Do not Round your immediate calculations). Break even volume _____?______ units.
B. Assume current sales are $403,000. Calculate the margin of safety and the margin of safety ratio. Margin of safety _____?_____ Margin of safety ratio ______?_____%
C. Calculate operating income of $5,300 units are sold in a month. (Do not round your intermediate calculations.) Operating income _____?_____
D. Calculate operating income of the selling price is raised to $48 per unit, advertising expenditures are increased by $7,500 per month and monthly unit sales volume becomes 6,000 units. (Do not Round your immediate calculations). Operating income _____?______
E. Assume that the firm adds another product to its product line and that the new product sales for $21 per unit has variable cost $14 per unit and causes fixed expenses in total to increase to $89,000 per month. Calculate the firms operating income of 5,300 units of the original product and 4,800 units of the given in the problem statement. (Do not round your intermediate calculations.) Operating income _______?_______
F. Calculate the firms operating income if 3,900 units of the original product and 6,200 units of the new products are sold each month. (Do not round your intermediate calculations.) Operating income _______?_______
Miller Metal Co. makes a single product that sells for $45 per unit. Variable costs are $27.6 per unit, and fixed costs total $65,395 per month. A. Calculate the number of units that must be sold each month for the firm to break even. (Do not Round your immediate calculations). Break even volume _____?______ units.
B. Assume current sales are $403,000. Calculate the margin of safety and the margin of safety ratio. Margin of safety _____?_____ Margin of safety ratio ______?_____%
C. Calculate operating income of $5,300 units are sold in a month. (Do not round your intermediate calculations.) Operating income _____?_____
D. Calculate operating income of the selling price is raised to $48 per unit, advertising expenditures are increased by $7,500 per month and monthly unit sales volume becomes 6,000 units. (Do not Round your immediate calculations). Operating income _____?______
E. Assume that the firm adds another product to its product line and that the new product sales for $21 per unit has variable cost $14 per unit and causes fixed expenses in total to increase to $89,000 per month. Calculate the firms operating income of 5,300 units of the original product and 4,800 units of the given in the problem statement. (Do not round your intermediate calculations.) Operating income _______?_______
F. Calculate the firms operating income if 3,900 units of the original product and 6,200 units of the new products are sold each month. (Do not round your intermediate calculations.) Operating income _______?_______
A. Calculate the number of units that must be sold each month for the firm to break even. (Do not Round your immediate calculations). Break even volume _____?______ units.
B. Assume current sales are $403,000. Calculate the margin of safety and the margin of safety ratio. Margin of safety _____?_____ Margin of safety ratio ______?_____%
C. Calculate operating income of $5,300 units are sold in a month. (Do not round your intermediate calculations.) Operating income _____?_____
D. Calculate operating income of the selling price is raised to $48 per unit, advertising expenditures are increased by $7,500 per month and monthly unit sales volume becomes 6,000 units. (Do not Round your immediate calculations). Operating income _____?______
E. Assume that the firm adds another product to its product line and that the new product sales for $21 per unit has variable cost $14 per unit and causes fixed expenses in total to increase to $89,000 per month. Calculate the firms operating income of 5,300 units of the original product and 4,800 units of the given in the problem statement. (Do not round your intermediate calculations.) Operating income _______?_______
F. Calculate the firms operating income if 3,900 units of the original product and 6,200 units of the new products are sold each month. (Do not round your intermediate calculations.) Operating income _______?_______
Explanation / Answer
A.BREAK EVEN VOLUME=FIXED COST/CONTRIBUTION PER UNIT
=FIXED COST/(SELLING PRICE PER UNIT-VARIABLE COST PER UNIT)
=$65,395/$(45-27.6)
=$65,395/$17.4
=3,758 UNITS
B.MARGIN OF SAFETY=CURRENT SALES-BREAK EVEN SALES
=$4,03,000-(3,758UNITS*$45)
=$4,03,000-$1,69,110
=$2,33,890
MARGIN OF SAFETY RATIO=MARGIN OF SAFETY/SALES=$2,33,890/$4,03,000=58.04%
C.CALCULATION OF OPERATING INCOME:
SALES =5,300 UNITS*$45=$2,38,500
LESS:VARIABLE COST=5,300 UNITS*$27.6=$1,46,280
CONTRIBUTION =$92,220
LESS:FIXED COST =$65,395
OPERATING INCOME =$26,825
D.SELLING PRICE=$48 PER UNIT
SALES UNITS=6,000
TOTAL SALES=6,000UNITS-*$48 =$2,88,000
LESS:VARIABLE COST=6,000UNITS*$27.6 =$1,65,600
CONTRIBUTION =$1,22,400
LESS:FIXED COST=$65,395+$7,500 =$72,895
OPERATING INCOME =$49,505
E. CONTRIBUTION FROM NEW PRODUCT
=UNITS SOLD*(SELLING PRICE PER UNIT-VARIABLE COST PER UNIT)
=4,800 UNITS*($21-$14)
=$33,600
OPERATING INCOME=CONTRIBUTION FROM OLD PRODUCT+CONTRIBUTION FROM NEW PRODUCT-FIXED COST
=$33,600+$92,220-$89,000
=$36,820
F.OPERATING INCOME=CONTRIBUTION FROM OLD PRODUCT+CONTRIBUTION FROM NEW PRODUCT-FIXED COST
=3,900 UNITS($45-$27.6)+6,200UNITS($21-$14)-$89,000
=$67,860+$43,400-$89,000
=$22,260