Please answer the following requirements on these general accounting question Last month when Holiday Creations, Inc., sold 36,000 units, totalsales were $304,000, total variable expenses were $221,920, andfixed expenses were $36,100.a. What is the company's contribution margin (CM) ratio?b. Estimate the change in the company's net operating income if itwere to increase its total sales by $1,200.

Step 1: Define Operating LeverageThe degree of operating leverage (DOL) is an accounting term that…

Answered: Last month when Holiday Creations,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 20MC: Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month...

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Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries? 0.42 and 2.2% 0.42and5% 2.4andl2% 2.Sandl3%
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Last month when Holiday Creations, Inc., sold 41,000 units, total sales were $306,000, total variable expenses were $217,260, and fixed expenses were $39,300. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $3,000?
Last month when Holiday Creations, Inc., sold 45,000 units, total sales were $289,000, total variable expenses were $236,980, and fixed expenses were $35,400. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $1,700? (Do not round intermediate calculations.) 1. Contribution margin ratio % 2. Estimated change in net operating income
Last month when Holiday Creations, Inc., sold 41,000 units, total sales were $302,000, total variable expenses were $256,700, and fixed expenses were $36,900. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $2,500? (Do nòt round intermediate calculations.) 1. Contribution margin ratio % 2. Estimated change in net operating income
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Last month when Holiday Creations, Inc., sold 36,000 units, total sales were $144,000, total variable expenses were $116,640, and fixed expenses were $38,000. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 300 units and total sales by $1,200? (Do not round intermediate calculations.) 1. Contribution margin ratio 2. Estimated change in net operating income
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Last month when Holiday Creations, Incorporated, sold 37,000 units, total sales were $148,000, total variable expenses were $115,440, and fixed expenses were $36,500. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 675 units and total sales by $2,700? Note: Do not round intermediate calculations. 1. Contribution margin ratio 2. Estimated change in net operating income %
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Last month when Holiday Creations, Incorporated, sold 41,000 units, total sales were $164,000, total variable expenses were $127,920, and fixed expenses were $38,700. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 525 units and total sales by $2,100? (Do not round intermediate calculations.) 1. Contribution margin ratio 2. Estimated change in net operating income 22%
Last month when Holiday Creations, Incorporated, sold 44,000 units, total sales were $176,000, total variable expenses were $144,320, and fixed expenses were $39,300. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 500 units and total sales by $2,000? (Do not round intermediate calculations.) X Answer is not complete. 1. Contribution margin ratio 2. Estimated change in net operating income 18 %

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