Decor manufactures decorative iron railings. In preparing for next years operations, managemnet has developed the following estimates:
Total Per Unit
Sales ( 100,000 units) 5,000,000 $50.00
Direct materials 1,160,000 $11.60
Direct labor (variable) 410,000 $4.10
Manufacturing Overhead:
Variable 510,000 $5.10
Fixed 560,000 $5.60
Selling and Administrative:
Variable $660,000 $6.60
Fixed $310,000 $3.10
1A. Compute the unit contribution margin. Answer = ?
1B. Compute the contribution margin ratio. Answer =?
1C. Compute the break-even in dollar sales. Answer=?
1D. Compute the Margin of safety percentage. Answer=?
1E. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?
1F. If the per unit variable production costs increase by 15% and, if fixed selling and administrative expenses increase by 12%, what will be the new break-even point in dollar sales?