# Exercise 18-5 Predicting sales and variable costs

.Exercise 18-5 Predicting sales and variable costs using contribution margin L.O. C2

 Orlando Company management predicts that it will incur fixed costs of \$250,000 and earn pretax income of \$350,000 in the next period. Its expected contribution margin ratio is 60%.

 Total dollar sales

 Total variable costs

rev: 03-04-11

2.

Exercise 18-10 Contribution margin, break-even, and CVP chart L.O. P2

 Apollo Company manufactures a single product that sells for \$168 per unit and whose total variable costs are \$126 per unit. The company’s annual fixed costs are \$630,000.

 Contribution margin

 Contribution margin ratio

 (c) Compute the company’s break-even point in units.
 Break-even point
 Break-even point

3.

Exercise 18-12 Income reporting and break-even analysis L.O. C2

 Apollo Company manufactures a single product that sells for \$168 per unit and whose total variable costs are \$126 per unit. The company’s annual fixed costs are \$630,000.
 (1) Prepare a contribution margin income statement for Apollo Company at the break-even point.(Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values. Omit the “\$” sign in your response.)
 (2) Assume if the company’s fixed costs increase by \$135,000, what amount of sales (in dollars) is needed to break even point?(Omit the “\$” sign in your response. )
 Break-even

4.

Exercise 18-13 Computing sales to achieve target income L.O. C2

 Apollo Company manufactures a single product that sells for \$168 per unit and whose total variable costs are \$126 per unit. The company targets an annual after-tax income of \$840,000. The company is subject to a 20% income tax rate. Assume that fixed costs remain at \$630,000.
 (1) Compute the unit sales to earn the target after-tax net income.
 Unit sales
 (2) Compute the dollar sales to earn the target after-tax net income.(Omit the “\$” sign in your response.)

 Dollar sales

5. Exercise 18-15 Predicting unit and dollar sales L.O. C2

 Greenspan Company management predicts \$500,000 of variable costs, \$800,000 of fixed costs, and a pretax income of \$100,000 in the next period. Management also predicts that the contribution margin per unit will be \$60.
 Total expected dollar sales
 (2) Compute the number of units expected to be sold next period.
 Expected unit sales

6.

Exercise 18-17 CVP analysis using composite units L.O. P4

 Home Builders sells windows and doors in the ratio of 8:2 (windows:doors). The selling price of each window is \$100 and of each door is \$250. The variable cost of a window is \$62.50 and of a door is \$175. Fixed costs are \$450,000.
 Selling price per composite unit
 Variable costs per composite unit
 (3) Determine the break-even point in composite units.
 Break-even point composite units
 (4) Determine the number of units of each product that will be sold at the break-even point.
 Unit sales of windows at break-even point Unit sales of doors at break-even point

rev: 03-04-11

7.

Problem 18-1A Contribution margin income statement and contribution margin ratio L.O. A1

 The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011. The drum sets sell for \$250 each. The company has a 25% income tax rate.
 Required:
 1 Prepare a contribution margin income statement for the company.(Input all amounts as positive values. Omit the “\$” sign in your response.)
 2.1 Compute its contribution margin per unit.(Input all amounts as positive values. Omit the “\$” sign in your response.)