V Given for one of the Products of Broadside Audio Co.

Sales Price per unit $40

Varaible expenses per unit $25
Total Fixed expenses per unit $30,000

Find: 1. Contribution Margin per product unit $40-$25= $15

2. Break -Even sales in units units

Let the number of sales units unknown be "X"
B/E= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
B/E= $30,000+$0=2,000 units $40(X)=$25(X)+$30,000+$0
$15 $40(X)-$25(X)=$30,000
$15(X)=$30,000

$15(X) =$30,000 Divide both sides $15

$15 $15
(X) =2,000

3. Sales in units that will produce net income of $6,000 units

Let the number of sales units unknown be "X"
T/P= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
T/P= $30,000+$6,000=2,400 units $40(X)=$25(X)+$30,000+$6,000
$15 $40(X)-$25(X)=$36,000
$15(X)=$36,000

$15(X) =$36,000 Divide both sides $15

$15 $15
(X) =2,400

4. Sales in units that will produce a net income of 25% of sales units
Let the number of sales units unknown be "X"
T/P= FC+Profit
CM
1= $30,000+25% OF $40 (SALES)(X)
$15(X)
1 x $15(X)=$30,000+$10(X) x$15(X) Mulitply both sides by $15(X)
$15(X) Contribution equation method
$15(X)=$30,000+$10(X) S=VC+FC+P Formula
$15(X)-$10(X)=$30,000 $40(X)=$25(X)+$30,000+25% OF $40( SALES)(X)
$5(X)=$30,000 Divide both sides $5 $40(X)-$25(X)-$10(X)=$30,000
$5(X)=$30,000 Divide both sides $5
$5(X) =$30,000
$5 $5 $5(X) =$30,000
$5 $5
(X) =6,000 units
(X) =6,000 units
5. Net Income, if 3,200 product units are sold
Let the unknown profit in dollars be "X"
Contribution equation method T/P= FC+Profit
S=VC+FC+P Formula CM
$40(3,200)=$25(3,200)+$30,000+(3,200)(X) 1. =$30,000+(3,200)(X)
$128,000=$80,000+$30,000+(3,200)(X) $15(3,200)
$128,000-$80,000-$30,000=(3,200)(X) 1. =$30,000+(3,200)(X)
$18,000=(3,200)(x) $48,000
1.x $48,000 =$30,000+(3,200)(X) x $48,000 Mulitply both sides by $48,000
$48,000
'$48,000-$30,000=(3,200)(X)
$18,000 =(3,200)(X)

6. The break-even sales in units, if variable expenses are increased by $3 per unit and
if total fixed costs are decreased by$9,000. units
Let the number of sales units unknown be "X"
B/E= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
B/E= ($30,000-$9,000)+$0=1,750 units $40(X)=($25+3)(X)+($30,000-9,000)+$0
$15-$3 $40(X)-$28(X)=$21,000
$12(X)=$21,000

$12(X) =$21,000 Divide both sides $12

$12 $12
(X) =1,750

7. If the company desires a net income of $15,000 on a sales volume of 5,000 units,
what must the unit selling price be, assuming no changes in the $25 variable expenses
per unit or the $30,000 total fixed expenses?
Let the unknown sales value per unit in dollars be "X"
Contribution equation method T/P= FC+Profit
S=VC+FC+P Formula CM
$(X))(5,000)=$25(5,000)+$30,000+$15,000 1. =$30,000+$15,000 0.0002
$(X))(5,000)=$125,000+$30,000+$15,000 $(X)(5,000)
$(X))(5,000)=$170,000 1. =$45,000
$(X)(5,000)
$(X))(5,000)=$170,000 1x$(X)(5,000) =$45,000 x $(X)(5,000) Mulitply both sides by $(X)(5,000)
5,000 5,000 Divide both sides 5,000 units $(X)(5,000)
$(x) =$34 $(X)(5,000) =$45,000

$(X)(5,000) =$45,000 Divide both sides 5,000 units

5,000 5,000 to solve for CM per unit

$(X) =$9+ CM
$25+ VC
=$34 SP
VI Given for Lone Product Corporation

Sales $50,000
Total fixed expenses $12,000
Total variable expenses $3,500

Find:
1. Variable Cost ratio %

2. Contribution margin ratio %

3. Break even sales $

Let the sales dollars unknown be "X"
B/E= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
B/E= $12,000+$0=$40,000 100%(X)=70%(X)+$12,000+$0
30%=.30 100%(X)-70%(X)=$12,000+$0
30%(X)=$12,000

.3(X) =$12,000 Divide both sides .3

.3 .3
(X) =$40,000

4. Sales that would produce a net income of $9,000 assuming no change in the variable
cost ratio and fixed expenses. $
Let the sales dollars unknown be "X"
T/P= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
=$12,000+$9,000=$70,000 100%(X)=70%(X)+$12,000+$9,000
30%=.30 100%(X)-70%(X)=$21,000
30%(X)=$21,000

.3(X) =$21,000 Divide both sides .3

.3 .3
(X) =$70,000

5. Sales that would provide a net income of 10% of sales, assuming no change in
variable cost ratio or total fixed expenses $
Let the sales dollars unknown be "X"
Contribution equation method T/P= FC+Profit
S=VC+FC+P Formula CM
100%(X)=70%(X)+$12,000+10%$(X) 1. =$12,000+10%$(X)
100%(X)-70%(X)-10%(X)=$12,000 30%$(X)=.30$(X)
20%(X)=$12,000
1. =$12,000+10%$(X)
.2(X) =$12,000 Divide both sides .2 .30$(X)
.2 .2
(X) =$60,000 1.x.30$(X) =$12,000+10%$(X) x .30$(X)
.30$(X) Multiply both sides .30$(X)
.30$(X) =$12,000+10%$(X)

.30$(X)-.10%S(X) =$12,000
.20$(X) =$12,000

.20$(X) =$12,000 Divide both sides .2

.20 .20

(X) =$60,000
 6 Break even sales, if total fixed expenses are reduced by $3,000 and if selling prices
are reduced by 20% per product unit, assuming no change in ratio of variable costs to
the number of product units produced and sold. $
Historical Revised
Sales $50,000 100% X 80% $40,000 100.00%
VC 35,000 70% 35,000 87.50%
CM $15,000 30% $5,000 12.50%
FC 12,000 (3,000) 9,000
NI $3,000 6% ($4,000) -(10.00%)

Let the sales dollars unknown be "X"

B/E= FC+Profit Contribution equation method
CM S=VC+FC+P Formula
B/E= $9,000+$0=$72,000 100%(X)=87.5%(X)+$9,000+$0
12.5%=.125 100%(X)-87.5%(X)=$9,000+$0
12.5%(X)=$9,000

.125(X) =$9,000 Divide both sides .125

.125 .125
(X) =$72,000

VII Target Net Income and Income Taxes 1 pkg

Meld Products Inc.produces and sells two products as follows: Wtd avge
F G 2/2
Selling prices per unit $25 $18 $43 $21.50
Variable costs per unit 20 15 35 17.50
CM $5 $3 $8 $4
Total Fixed costs are $15,750

Compute the break-evn point I terms of total units for each of these planned mixes:
1 pkg
1. Three F's for each G 3,500 units F G Wtd avge
Proof: unit 3 1 4/4
S CM $15 $3 4.50
VC
CM $15,750 1 pkg
2. Three G's for each F FC 15,750 4,500 units F G Wtd avge
NIBT 0 1 3 4/4
CM $5 $9 3.50

1 pkg
3. Five F's for every three G's 3,706 units F G Wtd avge
5 3 8/8
CM $25 $9 4.25

VIII Given for Blue Sisters Inc. Answer $ units Proof: $

S
Product selling price per unit $20 VC
Variable expenses $14 $6 CM 15,000 2,500 $15,000
Fixed expense $10,000 FC 10,000 10000
Target profit after taxes $200 NIBT 5,000 100% $5,000
Income tax rate 60% T 60% 3,000
NIAT 2,000 40% $2,000
Compute the number of product units that must be sold to achieve the target profit after taxes.
VII Target Net Income and Income Taxes
Meld Products Inc.produces and sells two products as follows:
F G
Selling prices per unit $25 $18
Variable costs per unit 20 15
CM
Total Fixed costs are $15,750

Compute the break-evn point I terms of total units for each of these planned mixes:

1. Three F's for each G units

Proof: unit
S CM
VC
CM
2. Three G's for each F FC units
NIBT
CM

3. Five F's for every three G's units

CM

VIII Given for Blue Sisters Inc. Answer $ units

S
Product selling price per unit $20 VC
Variable expenses $14 CM
Fixed expense $10,000 FC
Target profit after taxes $200 NIBT
Income tax rate 60% T
NIAT
Compute the number of product units that must be sold to achieve the target profit after taxes.
Proof: $