Question
1. ABC company prepared the following contribution format income statement based on a sales volume of 1,000 unites: Sales $25,000 Variable expenses $15,000 Contribution margin
1. ABC company prepared the following contribution format income statement based on a sales volume of 1,000 unites:
Sales | $25,000 |
Variable expenses | $15,000 |
Contribution margin | $10,000 |
Fixed expenses | $6,000 |
Net operating income | $4,000 |
a. Calculate contribution margin per unit, contribution margin ratio, and variable expense ratio. (5 points)
b. What would be the percentage increase in net operating income if sales volume increases by 50%? (5 points)
c. If the selling price increases by 10% and sales volume decreases by 10%, what would be the net operating income? (5 points)
d. What would be the break even point in unit sales if variable expenses per unit increases by 8% and fixed expenses increase by 10%? (5 points)
e. What is the margin of safety percentage? At what percentage of sale volume decrease the company would experience zero net operating income? (5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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