Question - ABC Company projected the following operating income for the coming year:
|
Units sold
|
350,000
|
|
|
|
Sales revenue
|
$8,400,000
|
|
Variable expenses
|
6,720,000
|
|
Contribution margin
|
1,680,000
|
|
Fixed expenses
|
1,512,000
|
|
Operating income
|
$168,000
|
Required:
a) Compute contribution margin ratio.
b) Compute contribution margin per unit.
c) Compute break-even points in units.
d) Compute break-even points in sales dollars.
e) Compute variable cost per unit.
f) Compute the number of units to be sold to earn operating income of: $300,000
g) Compute the additional income the company would earn if sales were to increase by $50,000 more than expected.
h) Ignore g) above, based on the sales revenue in the question, compute the margin of safety in sales dollars.
i) Compute the degree of operating leverage.