Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are 20% of sales, and fixed expenses total $595,200 annually. Required: Answer the following independent questions: 1. What is the product's CM per unit? Contribution margin per unit 2. Use the CM per unit to determine the break-even point in units. Break-even point in units 3. The company estimates that sales will increase by $60,000 during the coming year due to increased demand. By how much should net operating income increase? Increase in operating income
Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are 20% of sales, and fixed expenses total $595,200 annually. Required: Answer the following independent questions: 1. What is the product's CM per unit? Contribution margin per unit 2. Use the CM per unit to determine the break-even point in units. Break-even point in units 3. The company estimates that sales will increase by $60,000 during the coming year due to increased demand. By how much should net operating income increase? Increase in operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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subquestion 1, 2 and 3
Transcribed Image Text:Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are 20% of sales, and fixed
expenses total $595.200 annually.
Required:
Answer the following independent questions:
1. What is the product's CM per unit?
Contribution margin per unit
2. Use the CM per unit to determine the break-even point in units.
Break-even point in units
3. The company estimates that sales will increase by $60,000 during the coming year due to increased demand. By how much should
net operating income increase?
Increase in operating income
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