The large forward-facing statues in Job 3 sold at the following prices: 900 large forward-facing statues - $150/ statue Golden Wolves Statue Company would like to stop manufacturing the small and large profile statues and only sell the large forward-facing statue. The company’s contribution format income statement for sales of this statue in 2017 is given below assuming that all fixed expenses are now assigned to this statue: Total Per Unit % of Sales Sales (900 units) $135,000 $150.00 100% Variable Expenses $11,985 13.32 8.88 % Contribution Margin $123,015 $136.68 91.12 % Fixed Expenses $18,535 Net Operating Income $104,480 Step 1: Compute Golden Wolves Statue Company’s contribution margin ratio and variable expense ratio. Step 2: Compute Golden Wolves Statue Company’s break-even point in both unit sales and dollar sales using the equation method. Step 3: Assume that sales of the large forward-facing statue increase by $6,000 next year. If cost behavior patterns remain unchanged, by how much will the company’s net operating income increase due to sales of this statue? Use the contribution margin ratio to compute your answer. Step 4: Refer to the original data. Assume that Corey wants the company to earn a profit of at least $130,000 next year. How many units will have to be sold to earn this target profit?
The large forward-facing statues in Job 3 sold at the following prices: 900 large forward-facing statues - $150/ statue Golden Wolves Statue Company would like to stop manufacturing the small and large profile statues and only sell the large forward-facing statue. The company’s contribution format income statement for sales of this statue in 2017 is given below assuming that all fixed expenses are now assigned to this statue:
Total Per Unit % of Sales
Sales (900 units) $135,000 $150.00 100%
Variable Expenses $11,985 13.32 8.88 %
Contribution Margin $123,015 $136.68 91.12 %
Fixed Expenses $18,535
Net Operating Income $104,480
Step 1: Compute Golden Wolves Statue Company’s contribution margin ratio and variable expense ratio.
Step 2: Compute Golden Wolves Statue Company’s break-even point in both unit sales and dollar sales using the equation method.
Step 3: Assume that sales of the large forward-facing statue increase by $6,000 next year. If cost behavior patterns remain unchanged, by how much will the company’s net operating income increase due to sales of this statue? Use the contribution margin ratio to compute your answer.
Step 4: Refer to the original data. Assume that Corey wants the company to earn a profit of at least $130,000 next year. How many units will have to be sold to earn this target profit?
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