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Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 100% 40% 60% Amount $ 145,000 58,000 87,000 18,000 $ 69,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 26% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 26% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Miller Company's contribution format income statement for the most recent month is shown below: Sales (42,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 336,000 210,000 126,000 50,000 $ 76,000 Per Unit $8.00 5.00 $ 3.00 Required: (Consider each case independently) 1. What is the revised net operating income if unit sales increase by 16%? 2. What is the revised net operating income if the selling price decreases by $1.40 per unit and the number of units sold increases by 23%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $9,000, and the number of units sold decreases by 7%? 4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 10 cents per unit, and the number of units sold decreases by 12%? Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 620,000 434,000 186,000 145,200 $ 40,800 Per Unit $ 40 28 $ 12 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each month to attain a target profit of $70,800? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units thereby increasing sales by $81,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 38 Reg 4 Reg 5
