The following is Pacific Limited’s contribution format income statement for January 2022: Sales $1,400,000 Variable expenses 700,000 Contribution margin 700,000 Fixed expenses 400,000 Net operating income $ 300,000 The company has no beginning or ending inventories and produced and sold 25,000 units during the month. Required (show your calculation): a. The company’s top management team is currently investigating how many units they need to sell to reach the break-even point. Also, they want to know how much revenue they need to generate to reach the break-even point. What do you think? d.d. Company’s Marketing Manager is confident that she can increase sales by 28% next year with some effort. What would be the expected percentage increase in net operating income? Use the degree of operating leverage concept to comput
The following is Pacific Limited’s contribution format income statement for January 2022:
Sales $1,400,000
Variable expenses 700,000
Contribution margin 700,000
Fixed expenses 400,000
Net operating income $ 300,000
The company has no beginning or ending inventories and produced and sold 25,000 units during the month.
Required (show your calculation):
a. The company’s top management team is currently investigating how many units they need to sell to reach the break-even point. Also, they want to know how much revenue they need to generate to reach the break-even point. What do you think?
d.d. Company’s Marketing Manager is confident that she can increase sales by 28% next year with some effort. What would be the expected percentage increase in net operating income? Use the degree of operating leverage concept to compute your answer
Step by step
Solved in 2 steps
