Chapter 12, Problem 12.25P

To determine

(a)

Introduction:

Contribution means the price of per unit which is calculated by the sale price per unit less only variable cost per unit. At the time of calculation of contribution fixed cost will not be consider.

To choose:

Current total contribution and current average contribution margin ratio.

To determine

(b)

Introduction:

Operating profit means that profit which is occurs only by the main activity of the business.

To choose:

Calculate current operating profit.

To determine

(c)

Introduction:

Break-even point means no profit no loss condition.

To choose:

Break-even sale in dollars

To determine

(d)

Introduction: Company may incur loss in case of break-even point Because at the time of breakeven point company can run for long time purpose.

To choose:

Can company incur loss in breakeven point?

To determine

(f)

Introduction:

Analysis expansion scheme with the introduction new product line.

To choose:

Why or why not new product will be added or not.

To determine

(g)

Introduction:

If company expand its business process then profit may or may not be increase.

To choose:

Calculate operating profit under the expand business process.