Question

Please i need answer of Ex 5-1 the one with red highlights

ll mobily 4G 1:01 PM a paradiseangelcom.files.wordpress.com 252 of 803 made in part (3) aboue by iacreasing the unit sallcs in your wok w set operaling income and by whai pencealage did it increme wesaen1kmhre brad ef cycle นเ was pepdf in the 1930s. The retro-look cycle would be ahle cos to produce and sell the cyeles would he $7,500 pr unit. The annual fisedce wld What weuild be the break-even anit salles, the margis of salety in dollars, and the depee A had is woeried ahout the selling price, ao ave circllating that oher retro rands of cyclas may be revived. If so, the selling price for the Wieslers Hombrc would hun to be soduoed to 59,000 to compete cflectivcly. In thal event, Thad would alho redace fised espesmes by $300,000 by reducing advertising espenses, bet he still hopes to sell 500 units per year. Do you think this is a pood plan7 Explain Also esplan the degree of aconnect Exercises All applicable exercises are available with McGra-Hil's Connect Accounting. EXERCISE- Preparing a Contribution Format Incone Statement .O1 Sales 000 unts) 4,000 $8.0 Faed expenses . The sales velume increes by $0 unib 2. The sales velume declincs by 50 units 3. The sales volume is 7,000 EXERCISE 5-2 Prepare aCost-Volume Prof ICMPI Graph [LO2 Kalara Enterprises distrbules a single productwbose selling pice is S36 and whne variable expenne is 524 per unit. The company's monhly fued espeose is 512.000 1, Pepure aceg,wlune ofipaph for the company upN, a sales level of 2Λ00 units Estimae the company's break-even point in unit sales using your cos-veleme-pele graph EXERCISE 5 Prepare aProlfit Graph LO2) Capricio Esterpnes dotibutcs a single product whoe selling price is 519 and shose variable fiued espense s Si The company $12,000 er 1 Phepane a profe graph foe the company up o a sales vel of 4,000 n Esimae the company's break-even point in unil sales uning your prot graph. 214 Chapter 5 EXERCISE 54 Compuing and sing the CM Ratio LO3 Last mowh when Harion wone $240000 and fised expesses old 40,000 units What is the margin(CM) atio 2Estimale the change in dhe compary's net operating incoene if ii were so incase its s by $1.500

Answer 1

Ex 5-1.  

1 . If sales volume increased by 50 units. New sales volume will be 8000+50 = 8050 units

Contribution format income statement :-

Particulars	Total	Per unit
Sales (8050 units)	$209300	$26
Variable expenses	144900	18
Contribution Margin	64400	$8
Fixed expenses	56000
Net operating income

Note :- note that fixed expenses continues to remain fix in totality irrespective of change in units. Whereas variable cost remains fixed per unit.

2 . If sales volume declines de 50 units. Then new sales units = 8000-50= 7950 units .

Contribution format income statement

Particulars	Total	per unit
Sales (7950 units)	$206700	$26
Variable expenses	143100	18
Contribution Margin	$63600	$8
Fixed expenses	56000
Net operating income	$7600

3. If sales volume is 7000 units.

Contribution format income statement

Particulars	Total	per unit
Sales (7000 units )	$182000	$26
Variable expenses	126000	18
Contribution Margin	$56000	$8
Fixed expenses	56000
Net operating income	$0