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Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured i

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Northwood Company
Answer 1
Contribution margin income statement
Particulars Amount $ Per Unit $ Note
Units          56,000.00 E
Sales     1,400,000.00                   25.00 A
Variable Expenses        840,000.00                   15.00 B
Contribution margin        560,000.00                   10.00 C=A-B
Contribution margin % 40.00% D=C/A
Fixed Expenses        373,000.00 F
Breakeven point          37,300.00 G=F/C
Operating Income        187,000.00 H
Operating leverage                     2.99 I=C/H
Answer 2
Particulars Amount $
Sales                  25.00 See A
Variable Expenses                  18.00 J
Contribution margin                     7.00 K=A-J
Contribution margin % 28.00% L=K/A
Fixed Expenses        373,000.00 See F
Breakeven point          53,285.71 M=F/K
Answer 3 Amount $
Fixed Expenses        373,000.00 See F
Operating Income        187,000.00 See H
Target Contribution        560,000.00 N=F+H
Contribution margin                     7.00 See K
Units to be sold          80,000.00 O=N/K
Answer 4 Amount $
Contribution margin % of last year 40.00% See D
Variable Expenses % of last year 60.00% P= 1-D
Variable Expenses of current year                  18.00 See J
Sell Price should be                  30.00 Q= J/P
Answer 5 Amount $
Variable Expenses of last year                  15.00 See B
Decrease by 40%                     6.00 R= B*32.26%
Revised Variable Expenses                     9.00 S=B-R
Fixed Expenses of last year        373,000.00 See F
Fixed Expenses of current year        746,000.00 T= F*2
Particulars Amount $
Sales                  25.00 See A
Variable Expenses                     9.00 See S
Contribution margin                  16.00 U=A-S
Contribution margin % 64.00% V=U/A
Fixed Expenses        746,000.00 See T
Breakeven point          46,625.00 W=T/U
Answer 6
Fixed Expenses        746,000.00 See T
Operating Income        187,000.00 See H
Target Contribution        933,000.00 X= T+H
Contribution margin                  16.00 See U
Units to be sold          58,312.50 Y=X/U
Answer 7
Contribution margin income statement
Particulars Per Unit Total
Units           56,000.00
Sell Price                  25.00      1,400,000.00
Less- Variable costs                     9.00         504,000.00
Contribution margin                  16.00         896,000.00 Z
Less: Total Fixed costs         746,000.00 See T
Operating income         150,000.00
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