Maxson Products
Maxson Products
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Chapter 3
Maxson Products distributes a single product, a woven basket whose selling price is $8 and whose variable cost is $6 per unit. The company’s monthly fixed expense is $5,500.
Required:
1. Compute for the company’s break-even point in unit sales using the equation method.
2. Compute for the company’s break-even point in sales dollars using the equation method and the CM ratio.
3. Compute for the company’s break-even point in unit sales using the formula method.
4. Compute for the company’s break-even point in sales dollars using formula method and the CM ratio
3) Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budget appear below:
Selling price $25 per unit
Variable expenses $15 per unit
Fixed expenses $8,500 per month
Unit sales 1,000 units per month
Required:
1) Compute the company’s margin of safety.
2) Compute the company’s margin of safety as a percentage of its sales.
4)Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and fixed expenses were $45,000.
Required:
1) What is the company’s contribution margin (CM) ratio?
2) Estimate the change in the company’s net operating income if it were to increase its total sales by $1,500.
