1) | CM ratio | ||||||
contribution margin/sales | |||||||
1,620,000/3,240,000 | |||||||
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 | ||||||
40,000*50% | |||||||
20000 | |||||||
4-a) | Degree of operating leverage | ||||||
contribution margin/net income | |||||||
1,620,000/1,440,000 | |||||||
1.125 | |||||||
or 1.13 | |||||||
4b) | percentage increase in net income | ||||||
12*1.125% | |||||||
13.5 | |||||||
13.50% | answer | ||||||
5)-a) | unit sale =3,240,000/120 | ||||||
27000 | |||||||
now unit sales =27000*125% | |||||||
33750 | |||||||
selling price new = 120*85%= | 102 | ||||||
sales (33750*102) | 3442500 | ||||||
Variable expense (33750*60) | 2025000 | ||||||
Contribution margin | 1417500 | ||||||
fixed expense (180,000+78000) | 258000 | ||||||
Net operating income | 1159500 | ||||||
b) | net income will decrease by | 1,440,000-1,159,500 | |||||
net operating income(loss) | 280500 | ||||||
(it’s a loss if required show in negative ) | |||||||
per unit | |||||||
6) | sales | 120 | |||||
Variable expense | 61.9 | ||||||
Contribution margin | 58.1 | ||||||
increase in sales 25% | |||||||
(33750*58.1) - (180,000+x) = 1,440,000 | |||||||
1960875-180,000-x = | 1,440,000 | ||||||
x = | 340,875 | asnwer | |||||
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $3,240,000 1,620,000 1, 620,000 180,000 $1,440,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 3,000,000 Variable expenses 1,500,000 Contribution margin 1,500,000 Fixed expenses 180,000 Net operating income $ 1,320,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...
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Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: $ 1,120,000 560,000 560,000 160,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income 400,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in...
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,240,000 1,620,000 1,620,000 160,000 $ 1,460,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point...