Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows:   Total Sales $ 12,150,000 Total variable cost 7,533,000 Contribution margin $ 4,617,000 Total fixed cost 2,875,878 Operating income $ 1,741,122 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $per unit 1(b). Compute contribution margin per unit. Enter your answer to the nearest cent. $per unit 1(c). Compute contribution margin ratio.  % 1(d). Compute break-even point in units.  units 1(e). Compute break-even point in sales dollars. $ 2.  How many units must be sold to earn operating income of $376,542?  units 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. Margin of safety in units   units Margin of safety in sales dollars $   5.  Compute the degree of operating leverage. Round your answer to one decimal place. 6.  Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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CH7-Q50:

Hi I have asked this question before, but i haven't received explanation on requirement # 3. Also, last question was not answered. Please answer #6 (last question) and fully explain # 3. thanks!

Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows:

  Total
Sales $ 12,150,000
Total variable cost 7,533,000
Contribution margin $ 4,617,000
Total fixed cost 2,875,878
Operating income $ 1,741,122

Required:

1(a). Compute variable cost per unit. Enter your answer to the nearest cent.
$per unit

1(b). Compute contribution margin per unit. Enter your answer to the nearest cent.
$per unit

1(c). Compute contribution margin ratio.
 %

1(d). Compute break-even point in units.
 units

1(e). Compute break-even point in sales dollars.
$

2.  How many units must be sold to earn operating income of $376,542?
 units

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.

Margin of safety in units   units
Margin of safety in sales dollars $  

5.  Compute the degree of operating leverage. Round your answer to one decimal place.

6.  Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar.

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