ACCT 505 Solutions to Weekly Practice Problems - Week 3

3.
Sales (27,000 units × $18 per unit*)............
$486,000
 
Variable expenses
(27,000 units × $14 per unit)....................
 378,000
 
Contribution margin...................................
108,000
 
Fixed expenses ($90,000 + $35,000)............
 125,000
 
Net operating loss.....................................
$(17,000)
 
 
 
 

    *$20 – ($20 × 0.10) = $18

 

4.
Profit
=
Unit CM × Q − Fixed expenses
 
$4,500
=
($20.00 − $14.60*) × Q − $90,000
 
$4,500
=
($5.40) × Q − $90,000
 
$5.40Q
=
$94,500
 
Q
=
$94,500 ÷ $5.40 per unit
 
Q
=
17,500 units
Powered by