Problem 3The following information is available for Hearst Company.Sales Price$60Variable manufacturing costs...Problem 3The following...

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Question

Accounting

Problem 3
The following information is available for Hearst Company.
Sales Price
$60
Variable manufacturing costs
-34
Sales commission
10% of sales
price
-6
Fixed costs
$180,000
Answer the following questions
1
What is the contribution margin?
2
What is the CM ratio?
3
What is the income if we sell 8,000 units?
4
What is the break-even point in units?, in dollars?
5
How many units must be sold to earn $40,000
6
The tax rate is 30%. How many units must be sold to earn $45,000after taxes?
7
A new machine will reduce variabe costs by $5 per unit.
They are selling 12,000 units now.
8
Refer to the original data. They are currently selling 12,500units.
They want to lower the sales price to $56. How many units mustthey
sell to earn as much as they do now with the new numbers?

Answer & Explanation Solved by verified expert

3.7 Ratings (385 Votes)

1 Contribution margin sales variable cost sales variable manufacturing costs sales commission 6034620 2 CM ratio contribution margin Per unit sales price per unit 2060 3333 3 Income is calculated below Sales See Answer

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Transcribed Image Text

In: AccountingProblem 3The following information is available for Hearst Company.Sales Price$60Variable manufacturing costs...Problem 3The following information is available for Hearst Company.Sales Price$60Variable manufacturing costs-34Sales commission10% of salesprice-6Fixed costs$180,000Answer the following questions1What is the contribution margin?2What is the CM ratio?3What is the income if we sell 8,000 units?4What is the break-even point in units?, in dollars?5How many units must be sold to earn $40,0006The tax rate is 30%. How many units must be sold to earn $45,000after taxes?7A new machine will reduce variabe costs by $5 per unit.They are selling 12,000 units now.8Refer to the original data. They are currently selling 12,500units.They want to lower the sales price to $56. How many units musttheysell to earn as much as they do now with the new numbers?

Problem 3
The following information is available for Hearst Company.

Sales Price				$60
Variable manufacturing costs					-34
Sales commission		10% of sales	price		-6
Fixed costs				$180,000

Answer the following questions
1	What is the contribution margin?
2	What is the CM ratio?
3	What is the income if we sell 8,000 units?
4	What is the break-even point in units?, in dollars?
5	How many units must be sold to earn $40,000
6	The tax rate is 30%. How many units must be sold to earn $45,000after taxes?
7	A new machine will reduce variabe costs by $5 per unit.
	They are selling 12,000 units now.
8	Refer to the original data. They are currently selling 12,500units.
	They want to lower the sales price to $56. How many units mustthey
	sell to earn as much as they do now with the new numbers?