Chapter 20: Q37PGA (page 1130)
The budgets of four companies yield the following information:
Company
Beach Lake Mountain Valley
Net Sales Revenue \( 1,615,000 \)(d) \( 1,050,000 \)(j)
Variable Costs (a) 60,000 525,000 100,800
Fixed Costs (b) 232,000 260,000 (k)
Operating Income (Loss) 285,600 (e) (g) 31,500
Units Sold 170,000 10,000 (h) (l)
Contribution Margin per Unit \( 3.80 \) (f) \( 75.00 \) 9.00
Contribution Margin Ratio (c) 80% (i) 30%
Requirements
1. Fill in the blanks for each missing value. (Round the contribution margin per unit to the nearest cent.)
2. Which company has the lowest breakeven point in sales dollars?
3. What causes the low breakeven point?
Short Answer
(1)(a) $969,000
(b) 360,000
(c) 40%
(d) $300,000
(e) $8,000
(f) $24
(g) $265,000
(h) 7,000
(i) 50%
(j) $144,000
(k) $11,700
(l) 4,800
(2) The lowest breakeven point in sales dollars equals $39,000.
(3) Lower contribution margin ratio and lower fixed costs