Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $280 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $414,400, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $168 per 100 yards of XT rope. 1. Estimate Product XT’s break-even point in terms of sales units and sales dollars. (1 unit = 100 yards) (Do not round intermediate calculations.)
2. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.
Contribution Margin | per 100 yds. | |||||
Sales | 280 | |||||
Less: | Variable cost | 168 | ||||
Contribution margin | 112 | |||||
Contribution Margin ratio | ||||||
Choose Numerator: | / | Choose Denominator: | = | Contribution Margin Ratio | ||
CM per unit | / | Sales per unit | = | Contribution margin ratio | ||
112 | / | 280 | = | 40% | ||
1(a) Estimate Product XT’s break-even point in terms of sales units. (1 unit = 100 yards) | ||||||
Choose Numerator: | / | Choose Denominator: | = | Break-Even Units | ||
Fixed costs | / | Contribution margin per unit | = | Break-even units | ||
414400 | / | 112 | = | 3700 | units | |
1(b) Estimate Product XT’s break-even point in terms of sales dollars. | ||||||
Choose Numerator: | / | Choose Denominator: | = | Break-Even Dollars | ||
Fixed costs | / | Contribution margin ratio | = | Break-even dollars | ||
414400 | / | 40% | = | 1036000 | ||
2 | ||||||
PRAVEEN CO. | ||||||
Contribution Margin Income Statement (at Break-Even) — Product XT | ||||||
Units | $ per unit | Total | ||||
Sales | 3,700 | 280 | 1036000 | |||
Less: | Variable cost | 3,700 | 168 | 621600 | ||
Contribution margin | 3,700 | 112 | 414400 | |||
Less: | Fixed costs | 414400 | ||||
Net income | 0 |
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of...
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $170 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $214,200, up to a...
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a...
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $160 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $262,400, up to a...
Required information The following information applies to the questions displayed below.) Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $240 selling price per 100 yards of XT rope. Its fixed costs...
Required information [The following information applies to the questions displayed below.] Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $230 selling price per 100 yards of XT rope. Its fixed costs...
Required information (The following information applies to the questions displayed below) Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $190 selling price per 100 yards of XT rope. Its fixed costs...
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a...
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a...
Hi, Please answer this 2 part question. Required information [The following information applies to the questions displayed below.) Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $240 selling price per 100...
Need help with this accounting problem. Required information Problem 21-3A CVP analysis and charting LO P2, P3 [The following information applies to the questions displayed below.) Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans...