A tire manufacturer sells its finished goods for 80 SAR each. The variable cost to manufacture each product is 20 SAR, while fixed costs equal 20,700 SAR. In 2022, the company earned operating income of 32,100SAR

Submit as an excel document and show your work with formulas

Fill-in-the-Blank Equations

Fill-in-the-Blank Equations

1. __________ = Difference in Total Cost ÷ Difference in Units Produced

Variable Cost per Unit 

2. Contribution Margin = Sales – __________

Variable Costs

3. Contribution Margin Ratio = __________ ÷ Sales

Contribution Margin 

4. __________ = Fixed Costs ÷ Unit Contribution Margin

 Break-Even Sales (units) 

5. Sales (units) = (__________ + Target Profit) ÷ Unit Contribution Margin

Fixed Costs

6. Operating Leverage = Contribution Margin ÷ __________

Operating Income

7. Margin of Safety (percent of current sales) = (Sales – Sales at Break-Even Point) ÷__________

Sales

8. Margin of Safety (SAR) = Sales (SAR) – __________

Break-Even Sales (SAR) 

9. The total cost of production for the last four quarters for Moore’s Mowers is as follows. Use the high-low method to determine the variable cost per unit and the fixed cost.

                     Total Cost           Units Produced

Quarter 1     51,000 SAR          2,000

Quarter 2     56,400 SAR          2,300

Quarter 3     49,200  SAR         1,900

Quarter 4     53,700  SAR         2,150

Variable Cost = _____________18 SAR per unit

Fixed Cost = ____________ 15,000 SAR

10. During 2023, Caps by Huely sold 50,000 finished products with a contribution margin of 55%. The variable costs totaled 40,500 SAR for the year. Determine the sales, contribution margin, and unit contribution margin.

Sales = ____________  90,000 SAR

Sales price per unit = ____________     1.80 SAR

Variable cost per unit = ____________    (0.81) 

Contribution margin per unit= ____________      0.99 SAR

Contribution margin= ____________  49,500 SAR

11. If a manufacturing company had a contribution margin of $65,700 for 20Y5 from selling 25,000 products at 6 SAR each, determine the variable cost per unit, contribution margin ratio, and unit contribution margin. Round unit answers to two decimal places and percentages to the nearest whole percent.

Sales (SAR) = ____________ $150,000 

Contribution margin = ____________ (65,700) 

Total variable cost= ____________  $ 84,300 

Variable cost per unit= ____________  $3.37 

Unit contribution margin= ____________  $2.63 

Contribution margin ratio = ____________  44% 

12. Determine the change in operating income for each situation for a company that has an increase in total sales of $52,000. 

a. Unit contribution margin of $4.50 and each product selling for $8.

= ____________$29,250

b. Contribution margin ratio of 24% and each product selling for $10.

= ____________$12,480

c. Unit contribution margin of $6, with total variable costs of $25,000 at $5 per unit.

= ____________$30,000

13. After incurring an operating loss of $(6,000) in 20Y5, the production manager would like to know the break-even point in sales and units for the company. During 2023, the company sold 6,000 at $3 each. Variable costs for the year totaled $10,800. Determine the sales and units sold that were needed to break even.

Sales = ____________200,000 SAR

Variable costs = ____________ (80,000) 

Contribution margin = ____________120,000 SAR

Fixed costs= ____________ (50,400) 

Operating income = ____________ 69,600 SAR

14. A tire manufacturer sells its finished goods for 80 SAR each. The variable cost to manufacture each product is 20 SAR, while fixed costs equal 20,700 SAR. In 2022, the company earned operating income of 32,100SAR. In 2023, the CEO would like to increase operating income by 5%. Determine the sales in dollars and units needed to achieve the CEO’s goal. Round answers to the nearest whole number.

Target Profit = ____________ 33,705SAR = 32,100SAR × 1.05 

Sales (units) = ____________ 907 units = (20,700SAR + 33,705SAR) ÷ $60 

Sales (dollars) = ____________ $72,540 = (20,700SAR + 33,705SAR) ÷ 75%, or 907 units × 80SAR per unit 

Submit as an excel document for faculty grading.

*Due to rounding, the two methods will differ by $20 in sales.

15.Prepare a cost-volume-profit chart for a company that has an 80% contribution margin for goods that it sells for $150 each. The company’s fixed costs total $54,000. Also, determine the break-even point in units and sales.

Break-Even Point (units) = ____________ 450 units = $54,000 ÷ $120 per unit 

Break-Even Point (sales) = ____________ $67,500 = $54,000 ÷ 80%, or 450 units × $150 per unit  

 Submit as an excel document with cost-volume-profit chart for faculty grading.