Business, 13.02.2020 18:53 alyssaanniebug
Rosenthal Company makes and sells products with variable costs of $24 each. Rosenthal incurs annual fixed costs of $315,000. The current sales price is $87.
Required:
The following requirements are interdependent. For example, the $252,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements.
a. Determine the contribution margin per unit.
b-1. Determine the break-even point in units and in dollars.
b-2. Prepare an income statement using the contribution margin format.
c-1. Suppose that Rosenthal desires to earn a $252,000 profit. Determine the sales volume in units and dollars required to earn the desired profit.
c-2. Prepare an income statement using the contribution margin format.
d-1. If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
d-2 Prepare an income statement using the contribution margin format.
e-1. If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
e-2. Prepare an income statement using the contribution margin format.
f-1. If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
f-2. Prepare an income statement using the contribution margin format.
g. Assume that Rosenthal concludes that it can sell 10,000 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $280,000. Compute the margin of safety in units and dollars and as a percentage.
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