ACT-500 critical thinking 06


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Fill-in-the-Blank Equations

1. __________ = Difference in Total Cost ÷ Difference in Units Produced

2. Contribution Margin = Sales – __________

3. Contribution Margin Ratio = __________ ÷ Sales

4. __________ = Fixed Costs ÷ Unit Contribution Margin

5. Sales (units) = (__________ + Target Profit) ÷ Unit Contribution Margin

6. Operating Leverage = Contribution Margin ÷ __________

7. Margin of Safety (percent of current sales) = (Sales – Sales at Break-Even Point) ÷__________

8. Margin of Safety (SAR) = Sales (SAR) – __________

Break-Even Sales (SAR)

9. The total cost of production for the last four quarters for Moore’s Mowers is as follows. Use the high-low method to determine the variable cost per unit and the fixed cost.

Total Cost Units Produced

Quarter 1 51,000 SAR 2,000

Quarter 2 56,400 SAR 2,300

Quarter 3 49,200 SAR 1,900

Quarter 4 53,700 SAR 2,150

Variable Cost = _____________

Fixed Cost = ____________

10. During 2023, Caps by Huely sold 50,000 finished products with a contribution margin of 55%. The variable costs totaled 40,500 SAR for the year. Determine the sales, contribution margin, and unit contribution margin.

Sales = ____________

Sales price per unit = ____________

Variable cost per unit = ____________

Contribution margin per unit= ____________

Contribution margin= ____________

11. If a manufacturing company had a contribution margin of $65,700 for 20Y5 from selling 25,000 products at 6 SAR each, determine the variable cost per unit, contribution margin ratio, and unit contribution margin. Round unit answers to two decimal places and percentages to the nearest whole percent.

Sales (SAR) = ____________

Contribution margin = ____________

Total variable cost= ____________

Variable cost per unit= ____________

Unit contribution margin= ____________

Contribution margin ratio = ____________

12. Determine the change in operating income for each situation for a company that has an increase in total sales of $52,000.

a. Unit contribution margin of $4.50 and each product selling for $8.

= ____________

b. Contribution margin ratio of 24% and each product selling for $10.

= ____________

c. Unit contribution margin of $6, with total variable costs of $25,000 at $5 per unit.

= ____________

13. After incurring an operating loss of $(6,000) in 20Y5, the production manager would like to know the break-even point in sales and units for the company. During 2023, the company sold 6,000 at $3 each. Variable costs for the year totaled $10,800. Determine the sales and units sold that were needed to break even.

Sales = ____________

Variable costs = ____________

Contribution margin = ____________

Fixed costs= ____________

Operating income = ____________

14. A tire manufacturer sells its finished goods for 80 SAR each. The variable cost to manufacture each product is 20 SAR, while fixed costs equal 20,700 SAR. In 2022, the company earned operating income of 32,100SAR. In 2023, the CEO would like to increase operating income by 5%. Determine the sales in dollars and units needed to achieve the CEO’s goal. Round answers to the nearest whole number.

Target Profit = ____________

Submit as an excel document and show your work with formulas

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