Required 1Required 2 Required 3 Required 4Refer to the income statements in (1). For the present operations and the proposed new operations, compute (a) the degreeof operating leverage, (b) the break-even point in dollar sales, and (c) the margin of safety in dollars and the margin of safetypercentage. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (l.e. .1234 shouldbe entered as 12.34).)PresentProposeda. Degree of operating leverageb. Break-even point in dollar salesc. Margin of safety in dollarsMargin of safety in percentageRequired 1Required 2 Required 3 Required 4Refer again to the data in (1). As a manager, what factor would be paramount in your mind in deciding whether to purchasethe new equipment? (Assume that enough funds are available to make the purchase.)Ocyclical movements in the economyOReserves and surplus of the companyOPerformanoce of peers in the industryOStock level maintainedRequired 1Roquirad 2 Roquirad 3 Roaquired 4Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the company'smarketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses,the company would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claimsthis new approach would increase unit sales by 30% without any change in selling price; the company's new monthly fixedexpenses would be $495,558; and its net operating income would increase by 20%. Compute the company's break-even pointin dollar sales under the new marketing strategy, (Do not round intermediate calculations. Round your answer to the nearestwhole dollar amount.)Show less ANew break even point in dolar ales Morton Company's contribution format income statement for last month is given below.Sales (46,000 units x $21 per unit)Variable expensesContribution marginFixed expenses$ 966,000676, 200289, 890231, 840Net operating incone$ 57,960The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits varyconsiderably from year to year according to general economic conditions. The company has a large amount of unused capacity and isstudying ways of improving profits.Complete this question by entering your answers in the tabs below.Requlred 1 Requlred 2 Required 3 Required 4New equipment has come onto the market that would alow Morton Company to automate a portion of ts operations. Varible expenses would be reduced by$6.30 per unt. Hovever fived expenses would increase to a ota of $2,64 each month. Preare two contributon format income statements, one showingpresent operations and one showing how operations would appear i the new equipment is purchased. (Round "Per Unt" to 2 decimal places,.)Show less aMorton CompanyContribution Income StatementPresentProposedAmountPer Unit%AmountPer Unit%%%

Contribution will be calculated by deducting the variable cost from the sales. It will cover the…

Answered: Morton Company's contribution format…

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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Morton Company’s contribution format income statement for last month is given below: Sales (48,000 units × $ 30 per unit) $ 1,440,000 Variable expenses 1,008,000 Contribution margin 432,000 Fixed expenses 345,600 Net operating income $ 86,400 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required: 1. New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by $9.00 per unit. However, fixed expenses would increase to a total of $777,600 each month. Prepare two contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased. 2. Refer to the income statements in…
Required information [The following information applies to the questions displayed below.] The following information relates to a company's operations for last year. $ 1,300,000 Sales Variable expenses Contribution margin 440,000 860,000 600,000 Fixed expenses Net operating income 260,000 Average operating assets 812,500 The company's minimum required rate of return is 15%. 1. Calculate last year's return on investment (ROI). ROI
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Finny Inc's contribution format income statement for the most recent month is given below: Sales (58,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $1,160,000 812,000 348,000 278,400 69,600 $ The industry in which Finny Inc. operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required: 1. New equipment has come on the market that would allow Finny Inc. to automate a portion of its operations. Variable expenses would be reduced by $6 per unit. However, fixed expenses would increase to a total of $626,400 each month. Prepare two contribution format income statements: one showing present operations, and one showing how operations would appear if the new equipment were purchased. Amount Present Per Unit Percentage % CAR % % Amount Proposed Per Unit…
Alder Inc. produced and sold 2,000 units of one product during the year. The company's net income was $40,000, its fixed cost per unit was $60, and the variable cost ratio was .25. What must the company's sales revenue be if it wants to earn $50,000 next year? $192,000 O $208,000 $226,667 $211,111 None of the above
Pharoah Corporation's Cajun Spice division has a segment margin is $434200 for the current reporting period. The division has an asset turnover of 3.1. Segment margin as a percentage of sales is 10%. What is the division's ROI? O 31% O 10% O 21% O The answer cannot be determined from the information given.
ulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 408,000 492,000 455,000 $ 37,000 Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $208,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $164,000 and $125,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $150,000 and…
Bramble Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $217,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase net income.Compute the net income to be earned under each alternative.1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $enter a net income if the selling price is increased by 10% 2. Reduce variable costs to 55% of sales. Net income $enter a net income if the variable costs are reduced to 55% of sales 3. Reduce fixed costs by $18,000. Net income $enter a net income if the fixed costs are reduced by $18,000
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Elway Company provided the following income statement for the last year: Sales $714,390,000 Less: Variable expenses 557,689,000 Contribution margin $156,701,000 Less: Fixed expenses 195,362,000 Operating income $-38,661,000 At the beginning of last year, Elway had $38,657,000 in operating assets. At the end of the year, Elway had $41,360,000 in operating assets. Required: 1. Compute average operating assets.$fill in the blank 1 2. Compute the margin (as a percent) and turnover ratios for last year. If required, round your answers to two decimal places. Margin fill in the blank 2 % Turnover fill in the blank 3 3. Compute ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places.fill in the blank 4 % 4. ROI measures a company’s ability to generate relative to its investment in assets. The greater the ROI, the efficiently the company is generating from its assets. 5. CONCEPTUAL CONNECTION Comment…

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