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Magic Realm | |||
Workings for answer 1 a | |||
Particulars | Per unit | Amount $ | Remarks |
Units sold | 36,000.00 | ||
Sell Price | 62.00 | 2,232,000.00 | This is 36,000 units * $ 62 per unit. |
Variable cost | 42.00 | 1,512,000.00 | This is 36,000 units * $ 42 per unit. |
Answer 1 a | ||
Income Statement |
|
|
Sales | 2,232,000.00 | |
Less: Variable cost | 1,512,000.00 | |
Contribution margin |
|
|
Less: Fixed expenses | 630,000.00 | |
Net Operating Income | 90,000.00 | |
Answer 1 b | ||
Operating Leverage | 8.00 | |
Contribution margin/ Net Income |
Answer 2 a |
Expected percentage increase in net operating income will be % increase in units sold multiplied by Operating Leverage i.e. 8*26= 208% |
% Increase in units sold | 0.26 |
Operating Leverage | 8.00 |
Expected percentage increase in net operating income | 208% |
Answer 2 b | ||
Expected amount of net operating income | Note | |
Net Operating Income as per answer 1 a | 90,000.00 | A |
Expected percentage increase in net operating income | 208% | B |
Expected percentage increase in net operating income | 187,200.00 | C=A*B |
Expected amount of net operating income | 277,200.00 | D=A+C |
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