Stonebraker Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (9,000 units) $270,000 Variable expenses 189,000 Contribution margin 81,000 Fixed expenses 77,400 Net operating income $3,600 Required: A. What is the breakeven quantity? B. What is the breakeven sales dollar? C. What is the margin of safety in dollars? D. What is the degree of operating leverage? E. If sales increase to 9,400 units, what would be the estimated increase in net operating income? F. If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 19,200 units, what would be the estimated net operating income? G. Estimate how many units must be sold to achieve a target profit of $26,100.
Stonebraker Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (9,000 units) $270,000 Variable expenses 189,000 Contribution margin 81,000 Fixed expenses 77,400 Net operating income $3,600 Required: A. What is the breakeven quantity? B. What is the breakeven sales dollar? C. What is the margin of safety in dollars? D. What is the degree of operating leverage? E. If sales increase to 9,400 units, what would be the estimated increase in net operating income? F. If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 19,200 units, what would be the estimated net operating income? G. Estimate how many units must be sold to achieve a target profit of $26,100.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stonebraker Corporation has provided the following contribution format income statement. All
questions concern situations that are within the relevant range.
Sales (9,000 units) $270,000
Variable expenses 189,000
Contribution margin 81,000
Fixed expenses 77,400
Net operating income $3,600
Required:
A. What is the breakeven quantity?
B. What is the breakeven sales dollar?
C. What is the margin of safety in dollars?
D. What is the degree of operating leverage?
E. If sales increase to 9,400 units, what would be the estimated increase in net operating
income?
F. If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and
unit sales increase by 19,200 units, what would be the estimated net operating income?
G. Estimate how many units must be sold to achieve a target profit of $26,100.
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