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1. (12 points) Herron Company produces and sells a single product. The company's income statement for the most recent month is given below: Sales (7,500

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1. (12 points) Herron Company produces and sells a single product. The company's income statement for the most recent month is given below: Sales (7,500 units at $40 per unit) $300,000 Less manufacturing costs: Direct materials $63,400 Direct labor (variable) $84,400 Variable factory overhead $14,600 Fixed factory overhead $40,050 $202,450 Gross margin $97,550 Less selling and other expen Variable selling and other expenses $30,200 Fixed selling and other expenses $57,850 $88,050 Net operating income $9,500 There are no beginning or ending inventories. Required: Calculations must be shown and labeled for full credit to be awarded. a. Compute the company's monthly break-even point in units of product. Round to the next higher whole unit. (Hint: First convert the traditional income statement format to a contribution-approach format.) b. What would the company's monthly net operating income be if sales increased by 17.5% and there is no change in total fixed expenses? c. What dollar sales must the company achieve in order to earn a net operating income of $58,800 per month? What is the margin of safety in dollars and as a percentage, rounded to the nearest tenth of a percent? 1. (12 points) Herron Company produces and sells a single product. The company's income statement for the most recent month is given below: Sales (7,500 units at $40 per unit) $300,000 Less manufacturing costs: Direct materials $63,400 Direct labor (variable) $84,400 Variable factory overhead $14,600 Fixed factory overhead $40,050 $202,450 Gross margin $97,550 Less selling and other expen Variable selling and other expenses $30,200 Fixed selling and other expenses $57,850 $88,050 Net operating income $9,500 There are no beginning or ending inventories. Required: Calculations must be shown and labeled for full credit to be awarded. a. Compute the company's monthly break-even point in units of product. Round to the next higher whole unit. (Hint: First convert the traditional income statement format to a contribution-approach format.) b. What would the company's monthly net operating income be if sales increased by 17.5% and there is no change in total fixed expenses? c. What dollar sales must the company achieve in order to earn a net operating income of $58,800 per month? What is the margin of safety in dollars and as a percentage, rounded to the nearest tenth of a percent

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