1) | CM ratio | ||||||
contribution margin/sales | |||||||
540,000/1,080,000 | |||||||
0.5 | |||||||
50% | |||||||
2) | Break even sales in dollars | ||||||
fixed cost/contribution margin ratio | |||||||
180,000/50% | |||||||
360000 | |||||||
3) | Net operating income will increase by | ||||||
45,000*50% | |||||||
22500 | |||||||
4-a) | Degree of operating leverage | ||||||
contribution margin/net income | |||||||
540,000/360,000 | |||||||
1.5 | |||||||
4b) | percentage increase in net income | ||||||
10*1.5 | |||||||
15 | % | ||||||
5)-a) | unit sale = 1,080,000/40 | ||||||
27000 | |||||||
now unit sales =27000*125% | |||||||
33750 | |||||||
selling price new = 40*89%=$35.6 | |||||||
sales (33750*35.6) | 1201500 | ||||||
Variable expense (33750*20) | 675000 | ||||||
Contribution margin | 526500 | ||||||
fixed expense (180,000+64000) | 244000 | ||||||
Net operating income | 282500 | ||||||
b) | Decrease in net income | 77500 | |||||
per unit | |||||||
6) | sales | 40 | |||||
Variable expense | 22.1 | ||||||
Contribution margin | 17.9 | ||||||
increase in sales 25% | |||||||
(33750*17.9) - (180,000+x) = 360,000 | |||||||
604125 - 180,000-x =340,000 | |||||||
x = | 84,125 | asnwer | |||||
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses...
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