Problem A, B, and C "To be solved by DKhetan"

Problem A, B, and C

“To be solved by DKhetan”

ATTACHMENT PREVIEW

Problem A
Assume the Mountain Furniture Company sells two kinds of picnic tables, pine and redwood.
At a 2:1 unit
sales mix in which Mountain sells two pine tables for every redwood table, the following revenue and cost
information is available.
Redwood Table
Unit selling price
\$400
\$1,200
Unit variable costs
\$250
\$
600
Unit contribution margin
\$150
\$
600
Fixed costs per month:
\$18,000
Assuming a 2:1 sales mix, calculate Mountain Furniture’s current monthly average unit contribution margin,
break-even sales volume, and number of units of Pine and Redwood tables at break-even point.
Problem B
The Farm Fresh Food Market is a merchandiser of organic food items. The company is considering the
possibility of selling pomegranates that would sell for \$0.59 each.
Pomegranates can be acquired in
unlimited quantities for \$0.43 each.
There are no additional variable costs associated with acquiring and
selling pomegranates since labor is on a salaried basis.
However, in order to acquire pomegranates at this
price, Farm Fresh must pay \$4,000 per year for membership in an International co-op.
Required:
a. How many pomegranates would Farm Fresh need to sell annually to justify joining the co-op (break-
even)?
b.
What would be the total revenue at the breakeven point?
c.
How many pomegranates would the company need to sell to earn a profit of \$6,000?
d.
If pomegranates cost were \$0.51 instead of \$0.43, how many pomegranates would need to be sold in
order to earn the same \$6,000?
Problem C
During the most recent fiscal period, Karson Company had sales of \$80,000.
Variable costs are 40% of
sales and fixed costs amounted to \$16,000 for the year.
Calculate the following:
a.
Contribution margin ratio
b.
Operating leverage
c.
Breakeven sales in dollars
d.
Operating profit if sales increase by 15% next year