The Olney Corporation provided the following information to their CPA. The accountant was asked to help them
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The Olney Corporation provided the following information to their CPA. The accountant was asked to help them answer the questions listed below.
Sales | $ | 274,000 |
Variable expenses | 225,000 | |
Contribution margin | 49,000 | |
Fixed expenses | 37,000 | |
Net operating income | $ | 12,000 |
The company sold 8300 widgets during this period.
a. What is the company's contribution margin ratio?
b. What is the company's break-even in units?
c. What is the company's margin of safety in dollars?
d. What is the company's degree of operating leverage?
e. How many units would the company have to sell to attain a target profit of $16,100?
f. If sales increase by 135 units, what would the net operating income be?
Show all calculations in the text box. You can insert a table to organize your work.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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