Kensington Corporation has provided the following contribution format income statement. Answer each question independently based on the original data:Sales (6,000 units)$ 210,000Variable expenses150,000Contribution margin60,000Fixed expenses40,000Net operating income$ 20,000 Required:Enter the numbers only, rounded to the nearest whole number What is the break-even point in dollar sales? Estimate how many units must be sold to achieve a target profit of $60,000. What is the margin of safety in dollars? Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 25% increase in sales volume?If the variable cost per unit increases by $3, spending on advertising increases by $4,000, and unit sales increase by 550 units, what would be the estimated net operating income? (fil in spaces below for Q5)Unit contribution margin Unit sales Total Contribution margin Fixed expenses Net operating income

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Answered: break-even point

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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Kensington Corporation has provided the following contribution format income statement. Answer each question independently based on the original data:

Sales (6,000 units)	$ 210,000
Variable expenses	150,000
Contribution margin	60,000
Fixed expenses	40,000
Net operating income	$ 20,000

Required:

Enter the numbers only, rounded to the nearest whole number

What is the break-even point in dollar sales?
Estimate how many units must be sold to achieve a target profit of $60,000.
What is the margin of safety in dollars?
Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 25% increase in sales volume?
If the variable cost per unit increases by $3, spending on advertising increases by $4,000, and unit sales increase by 550 units, what would be the estimated net operating income? (fil in spaces below for Q5)

Unit contribution margin
Unit sales
Total Contribution margin
Fixed expenses
Net operating income

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