Attachment # 00012369 - Part_Two_-_answers_(2).xlsx

Part_Two_-_answers_(2).xlsx (12.19 KB)

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(refer to the detailed question and attachment below)

Explanations:a) Contribution margin per t-shirt = 497 shirtsTotal fixed costs $4925 / contribution margin $9.91 = 497Fixed costs $4925 + $1000 profit / contribution margin 9.91 = 598598 shirts$15 sales price - $5.09 variable costs per shirt = $9.914. Perform Cost-Volume-Profit Analysis1. Absorption Costing Income Statement2. Variable Costing Income Statement Sales Less: Cost of Goods Sold Gross Profit Less: Selling & Admin Expenses Net Operating Income$15 x 7800 shirts(5.05 x 7800 shirts) + (3358 x 12 months)117,000 - 79,686(.04 x 7800 shirts) + (1567 x 12 months)(5.05 x 7800 shirts) (3358 x 12 months) Less: Variable Manufacturing Costs Less: Variable Selling & Admin Costs(.04 x 7800 shirts) (1567 x 12 months) Contribution Margin117,000 - 39,390 - 312 Less: Fixed Manufacturing Costs Less: Fixed Selling & Admin Costs77298 - 40296 - 188043. Cost per Unit Absorption Costing Variable Costing(($3358 fixed manufacturing costs x 12 months) / 7800 shirts) + 5.05 variable manufacturing costsvariable manufacturing costsb) Contribution margin percentage = $9.91 contribution margin / $15 sales pricec) Break-even # of t-shirts per month = d) Break-even in sales dollars per month = e) # of t-shirts needed to earn $1,000 profit per month = Total fixed costs $4925 / contribution margin ratio .6607 OR break even quantity 497 shirts x $15 sales pricef) margin of safetyg) degree of operating leverageContribution margin $77,298 / net operating income $18,198Yearly sales $117,000 - sales at break even ($7454 x 12 months) / Yearly sales $117,000Business Simulation Project Report - Part Two