1) | CM ratio | |||||
contribution margin/sales | ||||||
1,560,000/3,120,000 | ||||||
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 | |||||
55,000*50% | ||||||
27500 | ||||||
4-a) | Degree of operating leverage | |||||
contribution margin/net income | ||||||
1,560,000/1,380,000 | ||||||
1.130435 | ||||||
or 1.13 | ||||||
4b) | percentage increase in net income | |||||
13*1.30435 | ||||||
14.69565 | ||||||
or 14.70% | ||||||
5)-a) | unit sale = 3,120,000/120 | |||||
26000 | ||||||
now unit sales =26000*125% | ||||||
32500 | ||||||
selling price new = 120*86%=$103.2 | ||||||
sales (32500*103.2) | 3354000 | |||||
Variable expense (32500*60) | 1950000 | |||||
Contribution margin | 1404000 | |||||
fixed expense (180,000+67000) | 247000 | |||||
Net operating income | 1157000 | |||||
b) | Decrease in net income = | 223000 | ||||
per unit | ||||||
6) | sales | 120 | ||||
Variable expense | 61.5 | |||||
Contribution margin | 58.5 | |||||
increase in sales 25% | ||||||
(32500*58.5) - (180,000+x) = 1,380,000 | ||||||
1901250 - 180,000-x =1,380,000 | ||||||
x = | 341,250 | asnwer |
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