Exercise 1817 Felde Bucket Co a manufacturer of rain barrels

Exercise 18-17 Felde Bucket Co., a manufacturer of rain barrels, had the following data for 2016 Sales Sales price Variable costs Fixed costs 2,200 units $41.88 per unit $17.59 per unit $18,700 What is the contribution margin ratio? (Round answer to 0 decimal places, e.g. 5,275.) Contribution margin ratio LINK TO TEXT VIDEO: APPLIED SKILLS What is the break-even point in dollars? (Round intermediate calculation and final answers to 0 decimal places, e.g. 5,275.) Break-even point LINK TO TEXT VIDEO: APPLIED SKILLS What is the margin of safety in dollars and as a ratio? (Round ratio to 2 decimal places, e.g. 12.25.) Margin of safety Margin of safety ratio LINK TO TEXT VIDEO: APPLIED SKILLS If the company wishes to increase its total dollar contribution margin by 30% in 2017, by how much will it need to increase its sales if selling price per unit, variable price per unit and total fixed costs remain constant? (Round answer to 0 decimal places, e.g. 2,520.) Total increase in sales required Click if you would like to Show Work for this question Show LINK TO TEXT VIDEO: APPLIED SKILLS

Solution

a) Contribution margin ratio = (41.88-17.59)*100/41.88 = 58%

b) Break even sales = 18700/.58 = $32241

c) Margin of safety = (2200*41.88)-32241 = 59895

Margin of safety ratio = 59895*100/92136 = 65%

d) Calculate total increase in sales :

Total contribution margin after 30% increase = 53438*130% = 69469.40

Total sales = 69469.40*100/58 = 119775

Total increase in sales required = 119775-92136 = $27639

	Present
Sales	92136
Variable cost	38698
Contribution margin	53438
Fixed cost	18700
Net income	34738