Required: 1. Compute the company's CM ratio and variable expense ratio. 2. Compute the company's break-even point in both units and sales dollars. Use the equation method. 3. Assume that sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Use the CM ratio to compute your answer. Refer to the original data A SSume that pext vear management wants the company to earn a
Required: 1. Compute the company's CM ratio and variable expense ratio. 2. Compute the company's break-even point in both units and sales dollars. Use the equation method. 3. Assume that sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Use the CM ratio to compute your answer. Refer to the original data A SSume that pext vear management wants the company to earn a
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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the question is in the attached pictures
Transcribed Image Text:Required:
1. Compute the company's CM ratio and variable expense ratio.
2. Compute the company's break-even point in both units and sales dollars. Use the equation
method.
3. Assume that sales increase by $400,000 next year. If cost behavior patterns remain unchanged,
by how much will the company's net operating income increase? Use the CM ratio to compute
your answer.
Refer to the original data A SSume that pext vear management wants the company to earn a
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