B. CT Company's projected profit for the coming year is as follows:TotalPer UnitSales$200,000$20Total variable cost120,00012Contribution margin$ 80,000$ 8Total fixed cost64,000Operating income$ 16,000Required:1. Compute the breakeven point in (a) units and in (b) sales dollars.2. How many units must be sold to earn an operating profit of $30,000?3. Compute the additional profit that CT would earn if sales were $25,000 more thanexpected.4. For the projected level of sales, compute the margin of safety in units and in salesdollars.5. Calculate the degree of operating leverage. Now suppose that Ct revises the forecastto show a 30% increase in sales over the original forecast. What is the percentchange un operating income expected for the revised forecast? What is the totaloperating income expected by CT after revising the sales forecast?

Formula is as follows: Break-even units = Fixed cost / (Price – Variable cost per…

1. Compute the breakeven point in (a) units and in (b) sales dollars. 2. How many units must be sold to earn an operating profit of $30,000? 3. Compute the additional profit that CT would earn if sales were $25,000 more than еxpected. 4. For the projected level of sales, compute the margin of safety in units and in sales dollars. 5. Calculate the degree of operating leverage. Now suppose that Ct revises the forecast to show a 30% increase in sales over the original forecast. What is the percent change un operating income expected for the revised forecast? What is the total operating income expected by CT after revising the sales forecast?

1. Compute the breakeven point in (a) units and in (b) sales dollars. 2. How many units must be sold to earn an operating profit of $30,000? 3. Compute the additional profit that CT would earn if sales were $25,000 more than еxpected. 4. For the projected level of sales, compute the margin of safety in units and in sales dollars. 5. Calculate the degree of operating leverage. Now suppose that Ct revises the forecast to show a 30% increase in sales over the original forecast. What is the percent change un operating income expected for the revised forecast? What is the total operating income expected by CT after revising the sales forecast?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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