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Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $ 24 $1,200,000 $40,000 $ 360,000 300,000 60,000 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.

Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $ 24 $1,200,000 $40,000 $ 360,000 300,000 60,000 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $1,200,000 840,000 360,000 300,000 $ 60.000 $ 24 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.
Transcribed Image Text:Q2: Following is the contribution margin income statement of a single product company: Sales Less variable expenses Contribution margin Less fixed expenses Net operating income Required: Total Per unit $ 80 56 $1,200,000 840,000 360,000 300,000 $ 60.000 $ 24 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.
Q1: Aladin company manufactures small batteries to be used in clocks, toys and some other electronic devices. The last month's income statement of Aladin is given below: Sales (30,000 lights) Less variable expenses Contribution margin Less fixed expenses Net operating income Total $ 300.000 1.80,000 120,000 100,000 $ 20.000 Per unit $ 10 6 $ 4 Required: Prepare Aladin's new income statement under each of the following conditions: 1. The sales volume increases by 15%. 2. The selling price decreases by 20% per unit, and the sales volume increases by 30%. 3. The selling price increases by 50% per unit, fixed expenses increase by $20,000 and the sales volume decreases by 5%. 4. Variable expenses increase by 20% per unit, the selling price increases by 12%, and the sales volume decreases by 10%..
Transcribed Image Text:Q1: Aladin company manufactures small batteries to be used in clocks, toys and some other electronic devices. The last month's income statement of Aladin is given below: Sales (30,000 lights) Less variable expenses Contribution margin Less fixed expenses Net operating income Total $ 300.000 1.80,000 120,000 100,000 $ 20.000 Per unit $ 10 6 $ 4 Required: Prepare Aladin's new income statement under each of the following conditions: 1. The sales volume increases by 15%. 2. The selling price decreases by 20% per unit, and the sales volume increases by 30%. 3. The selling price increases by 50% per unit, fixed expenses increase by $20,000 and the sales volume decreases by 5%. 4. Variable expenses increase by 20% per unit, the selling price increases by 12%, and the sales volume decreases by 10%..
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