Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
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 (8,000
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 (8,000 units at $54 per unit) $432,000 Less manufacturing costs: Direct materials $68,400 Direct labor (variable) $83,600 Variable factory overhead $16,800 Fixed factory overhead $40,350 $209,150 Gross margin $222,850 Less selling and other expenses: Variable selling and other expenses $34,800 Fixed selling and other expenses $51,750 $86,550 Net operating income $136,300 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 16.5% 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 $62,900 per month? What is the margin of safety in dollars and as a percentage, rounded to the nearest tenth of a percent
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started