Apple, Inc. informs us that the Fixed Costs to produce iPods are $35,000 per month. Fixed Costs to produce the Macintosh computers are also $35,000 per month. iPods sell for $300 each and have a variable cost of $60. Macs sell for $3,000 and have a variable cost of $800.
Calculate the following for each product:
(a) Contribution to overhead and profit (in dollars per unit sold)
(b) Contribution percentage (as a percentage of the selling price)
(c) The number of units which must be sold in a month to break-even (revenues = total costs)
(d) The dollar amount of sales revenue at the break-even point
Using the financial statements you produced above, calculate the following ratios:
1. Working Capital
2. Current Ratio
3. Quick Ratio (when using Accounts Receivable use the value NET of Allowance for Bad Debts)
4. A/R Turnover (assume beginning, ending, and average A/R are all the same)
5. Days' Sales in A/R (use 360 or 365, whichever you prefer)
6. Inventory Turnover (assume beginning, ending and average inventory are all the same)
7. Days' Sales in Inventory (use 360 or 365, whichever you prefer)
8. Debt to Equity Ratio (remember - only long-term debt)
9. Gross Margin Percentage
10. Net Income Percentage
11. Earnings Per Share (assume average # of common shares outstanding for the year is 1,500)