Problem
The following is Addison Corporation's contribution format income statement for last month:
|
Sales
|
$1,000,000
|
|
Less: Variable Expenses
|
$ 700,000
|
|
Contribution Margin
|
$ 300,000
|
|
Less: Fixed Expenses
|
$ 180,000
|
|
Net Income
|
$ 120,000
|
The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
• What is the company's contribution margin ratio?
• What is the company's break-even in units?
• If sales increase by 100 units, by how much should net income increase?
• How many units would the company have to sell to attain target profits of $150,000?
• What is the company's margin of safety in dollars?
• What is the company's degree of operating leverage?