Accounting questions?

Chosen Answer
Sandy:  Grayson Barricades fixed costs are $10,000 per year. Its warehouse sells a pallet of barricades with a contribution margin of 20%. How much in sales does Grayson need to break-even per year if barricades are its only product?
answer : D. $50,000
Break-even in sales = Fixed costs divided by contribution margin ratio = 10,000/0.2 = $50,000

Grass, Inc. variable costs are 25% of sales. Its selling price is $95 per unit. If Grass sells one unit more than break even units, how much will profit increase?
answer : D. $71.25
Once break-even is reached, fixed costs are covered. Each unit beyond that will contribute 0.75% of selling price to profit, i.e. 0.75 x $95 = $71.25.

Margulais, Inc. produces hair brushes. The selling price is $20 per unit and the variable costs are $8 per brush. Fixed costs per month are $4,800. If Margulais sells 10 more units beyond breakeven, how much does profit increase as a result?
answers : A. $120
Once break-even is reached, fixed costs are covered. Each unit beyond that will contribute $12 to profit, so 10 units will contribute $120 to profit.
2007-12-20 03:19:54