ercise 7-50 Break-Even Units, Contribution Margin Ratio, Multiple-P reak-even, Margin of Safety, Degree of Operating Leverage llico Inc's projected operating income (based on sales of 450,000 units) for the coming year as follows: Total Sales $11,700,000 Total variable cost 8,190,000 Contribution margin Total fixed cost $ 3,510,000 2,254,200 $ 1,255,800 Operating income equired: 1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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ECTIVE 1 2 45
Exercise 7-50 Break-Even Units, Contribution Margin Ratio, Multiple-Product
Break-even, Margin of Safety, Degree of Operating Leverage
Jellico Inc's projected operating income (based on sales of 450,000 units) for the coming year
is as follows:
Total
Sales
$11,700,000
Total variable cost
8,190,000
Contribution margin
$ 3,510,000
Total fixed cost
2,254,200
Operating income
$ 1,255,800
Required:
1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution
margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars.
2. How many units must be sold to earn operating income of $296,400?
3. Compute the additional operating income that Jellico would earn if sales were $50,000
more than expected.
4. For the projected level of sales, compute the margin of safety in units, and then in sales
dollars.
5. Compute the degree of operating leverage. (Note: Round answer to two decimal places.)
6. Compute the new operating income if sales are 10% higher than expected.
Transcribed Image Text:point for each or products? ECTIVE 1 2 45 Exercise 7-50 Break-Even Units, Contribution Margin Ratio, Multiple-Product Break-even, Margin of Safety, Degree of Operating Leverage Jellico Inc's projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $11,700,000 Total variable cost 8,190,000 Contribution margin $ 3,510,000 Total fixed cost 2,254,200 Operating income $ 1,255,800 Required: 1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars. 2. How many units must be sold to earn operating income of $296,400? 3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected. 4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars. 5. Compute the degree of operating leverage. (Note: Round answer to two decimal places.) 6. Compute the new operating income if sales are 10% higher than expected.
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