Use the information in the first worksheet tab (Instructions and company information) to complete the analysis in this tab. For each of a. through d., below, show all computations in good form and label properly all amounts presented.
a. Compute Western Manufacturing Company's budgeted break-even sales - number of units and dollars - for the month of March 20X1. To do so, use the Cost-Volume-Profit model, SP x Q - VC x Q = FC, described and illustrated on page 15 of the background paper, Management Accounting Concepts.
b. Compute the company's required sales - number of units and dollars - necessary to achieve its budgeted net income for the month of March 20X1. To do so, use the Cost-Volume-Profit model, Targeted NI = [(SP x Q) - (VC x Q) - FC] x (1 - t), described and illustrated on page 16 of the background paper, Management Accounting Concepts.
c. Compute the company's operating leverage ratio using budgeted operating results for the month of March 20X1. As described on page 15 of the background paper, Management Accounting Concepts, the operating leverage ratio is computed as: CM ratio / Net margin ratio, where CM ratio = Unit CM / SP, and Net margin ratio = Net income / Sales.
d. Management is contemplating the expanded advertising expenditures for the month of March 20X1 (see Company Information in previous tab). Assuming management does not change the product's selling price, compute the additional amount of sales - units and dollars - necessary to achieve the company's budgeted net income for the month, if it proceeds with the additional advertising campaign. It may be helpful to review the illustration on pages 17 - 18, ("Estimating Impact of Contemplated Management Decisions") of the background paper, Management Accounting Concepts.
Attachment:- Assignment File.rar