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Dana’s Ribbon World makes award rosettes. Following is information about the company:         Variable cost per rosette $ 2.00 Sales price per rosette $ 6.00 Total fixed costs per month $ 6000.00     Required: 1. Suppose Dana’s would like to generate a profit of $1,120. Determine how many rosettes it must sell to achieve this target profit. 2. If Dana’s sells 2,140 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales. 3. Calculate Dana’s

Dana’s Ribbon World makes award rosettes. Following is information about the company:         Variable cost per rosette $ 2.00 Sales price per rosette $ 6.00 Total fixed costs per month $ 6000.00     Required: 1. Suppose Dana’s would like to generate a profit of $1,120. Determine how many rosettes it must sell to achieve this target profit. 2. If Dana’s sells 2,140 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales. 3. Calculate Dana’s

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Dana’s Ribbon World makes award rosettes. Following is information about the company:
 

     
Variable cost per rosette $ 2.00
Sales price per rosette $ 6.00
Total fixed costs per month $ 6000.00
 

 

Required:

1. Suppose Dana’s would like to generate a profit of $1,120. Determine how many rosettes it must sell to achieve this target profit.

2. If Dana’s sells 2,140 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

3. Calculate Dana’s degree of operating leverage if it sells 2,140 rosettes.

4a. Using the degree of operating leverage, calculate the change in Dana’s profit if unit sales drop to 1,819 units.

4b. Prepare a new contribution margin income statement to verify change in dana's profit.
 

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