SkiCo, Inc., manufactures ski boots. The companys projected income for the coming year, based on sales of

SkiCo, Inc., manufactures ski boots. The company’s projected income for the coming year, based on sales of 160,000 units, is as follows:

Required:
In completing the following requirements, ignore income taxes.
1. Prepare a CVP graph for SkiCo, Inc., for the coming year.
2. Calculate the firm’s break- even point for the year in sales dollars.
3. What is the company’s margin of safety for the year?
4. Compute SkiCo’s operating leverage factor, based on the budgeted sales volume for the year.
5. Compute SkiCo’s required sales in dollars in order to earn income of $ 9,000,000 in the coming year.
6. Describe the firm’s cost structure. Calculate the percentage relationships between variable and fixed expenses and sales revenue.
(CMA,adapted)

Transcribed Image Text:

Sales Operating expenses: $16,000,000 Variable expenses Ficed expense.. Total expenses.... ..$4.000,000 6.000.000 10,000,000 6,000,000 Net income .