Ozark Metal Co. makes a single product that sells for $43 per unit. Variable costs are $29.8 per unit, and fixed costs total$65,500 per month.Required:a. Calculate the number of units that must be sold each month for the firm to break even.b. Assume current sales are $406,000. Calculate the margin of safety and the margin of safety ratio.c. Calculate operating income if 6,700 units are sold in a month.d. Calculate operating income if the selling price is raised to $46 per unit, advertising expenditures are increased by $7,500per month, and monthly unit sales volume becomes 7,400 units.e. Assume that the firm adds another product to its product line and that the new product sells for $21 per unit, has variablecosts of $15 per unit, and causes fixed expenses in total to increase to $88,000 per month. Calculate the firm's operatingincome if 6,700 units of the original product and 4,900 units of the new product are sold each month. For the originalproduct, use the selling price and variable cost data given in the problem statement.f. Calculate the firm's operating income if 3,800 units of the original product and 7,800 units of the new product are soldeach month.g. Why operating income is different in parts e and f, even though sales totaled 11,600 units in each case.

Breakeven Units = Fixed CostsContribution per unit Margin of Safety = Current Sales - Breakeven…

Ozark Metal Co. makes a single product that sells for $43 per unit. Variable costs are $29.8 per unit, and fixed costs total $65,500 per month. Required: a. Calculate the number of units that must be sold each month for the firm to break even. b. Assume current sales are $406,000. Calculate the margin of safety and the margin of safety ratio. c. Calculate operating income if 6,700 units are sold in a month.

Ozark Metal Co. makes a single product that sells for $43 per unit. Variable costs are $29.8 per unit, and fixed costs total $65,500 per month. Required: a. Calculate the number of units that must be sold each month for the firm to break even. b. Assume current sales are $406,000. Calculate the margin of safety and the margin of safety ratio. c. Calculate operating income if 6,700 units are sold in a month.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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