hi, I have two questions if someone wouldn't mind helping me with! Thanks

Question 1: The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000. If the company's target net operating income is $60,000, sales would have to be:


Question 2: Korn Company sells two products, as follows:
Selling Price Per Unit Variable Expense per unit
Product Y $120 $70
Product Z 500 200

Fixed Expenses total $300,000 annually. The expected sales mix in units is 60% for product Y and 40% for product Z. How much is Korn's expected break-even sales in dollars?

As a general rule most of is do NOT do homework questions. The assignments were given to you to do and learn from. If you want to show the calcs YOU did and ask us to confirm or critique, that's acceptable.

The questions I'm asking are just practice problems... I have the answers to them but I don't know how to get to the answers

Then you need to try and arrive at the answers. That's what YOU need to learn. If they are practice answers, your workbook should give you clues.

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Originally Posted by marissaann

hi, i have two questions if someone wouldn't mind helping me with!! thanks

Question 1: The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000. If the company's target net operating income is $60,000, sales would have to be:

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Sales = X

Sales $150,000
VC = Sales – CM = $105,000
CM .3X = $45,000
FC
NI

CM – FC = 0
45,000 – FC = 0
FC = $45,000

Sales = ?
VC
CM 60,000 + 45,000 = $105,000
FC $45,000
NI $60,000

We know that CM = .3X, with X being sales
$105,000 = .3X
X = $350,000

Therefore, Sales must be $350,000 to earn an operating income of $60,000

Quote:

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Originally Posted by marissaann

Question 2: Korn Company sells two products, as follows:
Selling Price Per Unit Variable Expense per unit
Product Y $120 $70
Product Z 500 200

Fixed Expenses total $300,000 annually. The expected sales mix in units is 60% for product Y and 40% for product Z. How much is Korn's expected break-even sales in dollars?

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X = sales of Z

Sales = 500*X + 120*1.5*X = 680*X
VC = 200*X + 70*1.5*X = 305*X
CM = 300,000 or 375*X
FC 300,000
NI 0

CM=
300,000 = 375*X
X = 800

Therefore, 800 units of Z are expected to be sold.
Therefore, 800x1.5=1,200 units of Y are expected to be sold.
Total sales for break even are 1,200 x $120 + 800 x $500 = $544,000