Problem - Bohlen Corporation produces and sells a single product. Data concerning that product appear below:
|
|
Per Unit
|
Percent of Sales
|
|
Selling Price
|
$180
|
100%
|
|
Variable expenses
|
36
|
20%
|
|
Contribution margin
|
$144
|
80%
|
Fixed expenses are $716,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently.
Required:
a. What is the company's contribution margin ratio?
b. What is the company's break-even in units?
c. If sales increase by 100 units, by how much should net operating income increase?
d. How many units would the company have to sell to attain target profits of $125,000?
e. What is the company's degree of operating leverage?