CVP; DOL; MS—two quarters; comprehensive) Following is information per¬ taining to Tigers Company’s operations of the first and second quarter of 2007:

Additional Information • There were no beginning/ending finished goods at January 1, 2007.
• Tigers writes off any quarterly underapplied or overapplied overhead as an adjustment to Cost of Goods Sold.
• Tigers’ income tax rate is 35 percent.

a. Prepare a variable costing income statement for each quarter.

b. Calculate each of the following for 2007 if 260,000 units were produced and sold:
1. Unit contribution margin.
2. Contribution margin ratio.
3. Total contribution margin.
4. Net income.
5. Degree of operating leverage.
6. Annual break-even unit sales volume.
7. Annual break-even dollar sales volume.
8. Annual margin of safety as a percentage.
9. Annual margin of safety in units.

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First QUARTER Second Units Production 70,000 60,000 Sales 60,000 70,000 Expected activity level 65,000 65,000 Unit selling price $37.50 $37.50 Unit variable costs Direct material $17.25 $17.25 Direct labor 8.25 8.25 Factory overhead 3.90 3.90 Selling and administrative 2.85 2.85 Fixed costs Factory overhead $97,500 $97,500 Selling and administrative 21,400 21,400