Question

ACC 2302
1. Ex.4-38.Algo Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: 2. Ex.4-39.Algo Total 3. Pr.4-40.Algo Sales $ 12,150,000 7,290,000 Total variable cost Contribution margin $ 4,860,000 Total fixed cost 2,865,240 Operating income $ 1,994,760 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. per unit $ (b). Compute contribution margin per unit. Enter your answer to the nearest cent. per unit 1(c). Compute contribution margin ratio. % 1(d). Compute break-even point in units. units

Answer 1

1 (a) Variable cost per unit= $ 16.2

1 (b) Contribution per unit= 10.8 $

1 (c) Contribution margin ratio= 40 %

1 (d) Breakeven point in units= 265,300 unit

1 (e) Breakeven point in sales dollar= 7,163,100

2 Units to be sold to earn income of 374,760 $= 300,000 units

3. Additional operating income if sales is more than 50,000= 20,000 $

4. Margin of safety in units= 184,700 units

Margin of safety in dollars= 4,986,900 $

5. Degree of operating leverage= 243.6%

6. New operating income if sales are 10% higher than expected= 2,480,760 $