Homework Answers
| Q-4 | Answer:- | ||||
| Pounds of Material to be purchased in May 66,000 pounds. | |||||
| Schedule for pounds of material to be purchased | |||||
| April | May | June | |||
| Required Production in Units | 20,000 | 35,000 | 25,000 | ||
| Raw Material per unit ( in pounds) | 2 | 2 | 2 | ||
| Raw Material Needed to meet production | 40,000 | 70,000 | 50,000 | in Pounds | |
| Add- Desired ending Raw Material inventory | 14,000 | 10,000 | - | in Pounds | |
| Total pounds of Raw Material Needed | 54,000 | 80,000 | - | in Pounds | |
| Less-Beginning Raw Material Inventory | (6,400) | (14,000) | (10,000) | in Pounds | |
| Total Pounds Of Raw Material to be purchased | 47,600 | 66,000 | - | in Pounds | |
| 70,000 x 20%=14,000 | 50,000 x 20%=10,000 | ||||
| Q-5 | Answers:- | |
| Net operating Income | $ 2,850,000 | |
| Breakeven Point in Units | 2,000,000 Units | |
| Breakeven Point in Dollars | $4,000,000 | |
| Margin Of Safety in Units | 3,000,000 Units | |
| Margin Of Safety in Dollars | $6,000,000 |
| Sales | $ 10,000,000 | ($5,000,000x$2) |
| Less- Variable Cost | $ 5,250,000 | ($5,000,000x$1.05) |
| Contribution | $ 4,750,000 | |
| Less-Fixed Cost | $ 1,900,000 | |
| Net operating Income | $ 2,850,000 |
| Break even Point in Units= Fixed Cost/ Contribution Per Unit | |
| = | ($1,900,000/0.95) |
| = | 2,000,000 Units |
| Contribution Per Unit= Sales Price per unit-Variable Cost Per Unit | |
| = | $2-$1.05 |
| = | 0.95 |
| Breakeven Point in Dollars= Fixed Cost/ Contribution Margin Ratio | |
| = | $1,900,000/.475 |
| = | $4,000,000 |
| Contribution Margin Ratio= (Contribution/ Sales)x100 | |
| = | (0.95/2)X100=0.475x100 |
| = | 47.50% |
| Margin Of Safety in Units | |
| Sales in units -Break even in Units | |
| = | 5,000,000-2,000,000 |
| = | 3,000,000 Units |
| Margin Of Safety in Dollars | |
| = | Sales in Dollars -Break even in Dollars |
| = | $10,000,000-$4,000,000 |
| = | $6,000,000 |
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