Problem set

A computer store has sale revenue of $120,000 from selling 2,000 one-terabyte (1 TB) portable hard drives. The selling price per 1 TB portable hard drive is $60. This computer store purchases hard drives from a whole sale supplier for $42 per piece. This computer store has administrative expenses of $17,000 in fixed costs. Additionally, it has $5,000 in depreciation. The total fixed costs include administrative and depreciation expenses.

1. Please use the format of a contribution margin income statement to calculate the contribution margin (in dollars), unit contribution, and contribution margin ratio for this computer store. You can refer to the format of Example 1 in the textbook or in the class notes.

Total

Per Unit

Percentage

Sales (xxx units) Less: Variable costs Contribution margin Less: Fixed costs Net income

 

1. What will be the break-even point in units and in dollars if we assume that this computer store sells the portable hard drives only?
2. Please draw the break-even and profit-volume charts (2 charts) in Excel. You will create a few data points to draw graphs. Please add a chart title, specify the lines and units on vertical and horizontal axes, and the numbers on the horizontal axis should align with each tick mark.

1

1. How many units must this computer store sell to earn a pre-tax income of $68,000?
2. If the company’s tax rate is 35 percent, how many units must be sold to earn an after-tax profit of
3. $86,000?
4. What is the company’s margin of safety based on the sales of 3,000 portable hard drives?
5. Assume that there is no change in fixed costs. What will be the expected net income if this company
6. has the sales revenue of $390,000?

For how to create a line chart in Excel, please watch this Youtube

video: https://www.youtube.com/watch?v=b0EB7i8gJ4g . 

• 1495767059-project budgeting .xlsx

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Status NEW Posted 26 May 2017 02:05 AM My Price 11.00

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