Q2: Following is the contribution margin income statement of a singleproduct company:SalesLess variable expensesContribution marginLess fixed expensesNet operating incomeRequired:Total Per unit$ 8056$1,200,000840,000360,000300,000$ 60.000$241. Calculate break-even point in units and dollars.2. What is the contribution margin at break-even point?3. Compute the number of units to be sold to earn a profit of $36,000.4. Compute the margin of safety using original data.5. Compute CM ratio. Compute the expected increase in monthly netoperating if sales increase by $160,000 and fixed expenses do notchange. Q1: Aladin company manufactures small batteries to be used in clocks,toys and some other electronic devices. The last month's incomestatement of Aladin is given below:Sales (30,000 lights)Less variable expensesContribution marginLess fixed expensesNet operating incomeTotal$ 300.0001.80,000120,000100,000$ 20.000Per unit$106$ 4Required:Prepare Aladin's new income statement under each of the followingconditions:1. The sales volume increases by 15%.2. The selling price decreases by 20% per unit, and the sales volumeincreases by 30%.3. The selling price increases by 50% per unit, fixed expensesincrease by $20,000 and the sales volume decreases by 5%.4. Variable expenses increase by 20% per unit, the selling priceincreases by 12%, and the sales volume decreases by 10%..

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Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $ 24 $1,200,000 $40,000 $ 360,000 300,000 60,000 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.

Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $ 24 $1,200,000 $40,000 $ 360,000 300,000 60,000 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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Starling Co. manufactures one product with a selling price of 18 and variable cost of 12. Starlings total annual fixed costs are 38,400. If operating income last year was 28,800, what was the number of units Starling sold? a. 4,800 b. 6,400 c. 5,600 d. 11,200
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