Please explain and calculate in detail (please write down the formulas for calcu
ID: 2574440 • Letter: P
Question
Please explain and calculate in detail (please write down the formulas for calculation as well please). Thank you, need help
Koala Kare Bears Brother and sister, Carl and Carla Misney, decided to start their own business to to manufacture stuffed animals for children. Carl is the creative force behind the designs and Carla is the supply chain management guru. Together they created a new company called Koala Kare Bears In the first year of operations the company sold 50,000 units of its products. Below is presented the company's sales and cost information. Sales Variable costs Contribution margin Fixed costs Income before taxes Income taxes (32% rate) Net income $800,000 100,000 700,000 560,000 140,000 44,800 195 200= The management duo know that another challenging and competitive year lies ahead of them. Now entering their second year of operations, they are considering two alternatives and have hired your group to help them make some important business decisions.Explanation / Answer
1
Compute the contribution Margin per unit for each product line.
contribution Margin/ Number of units sold
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
Number of units sold
50000
50000
contribution margin per unit
4.8
14
2
Compute the contribution Margin ratio for each product line.
Contribution Margin/sales
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
Sales
800000
800000
PV ratio
30%
87.5%
3
Break even point in sales dollars
Fixed cost/pv ratio
Customizable prod line
Existing prod. Line
Fixed cost
100000
560000
Pv ratio
30%
87.50%
Break even point in sales dollars
333333.3333
640000
4
Compute the operating leverage for each product line
Contribution/ EBIT
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
EBIT
140000
140000
Operating Leverage
1.71
5
1
Compute the contribution Margin per unit for each product line.
contribution Margin/ Number of units sold
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
Number of units sold
50000
50000
contribution margin per unit
4.8
14
2
Compute the contribution Margin ratio for each product line.
Contribution Margin/sales
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
Sales
800000
800000
PV ratio
30%
87.5%
3
Break even point in sales dollars
Fixed cost/pv ratio
Customizable prod line
Existing prod. Line
Fixed cost
100000
560000
Pv ratio
30%
87.50%
Break even point in sales dollars
333333.3333
640000
4
Compute the operating leverage for each product line
Contribution/ EBIT
Customizable prod line
Existing prod. Line
Contribution Margin
240000
700000
EBIT
140000
140000
Operating Leverage
1.71
5