1- Assume that more than one product is being sold in each of the following situations (fill in the missing information).

Case 1 Case 2

Sales $400,000 $-------------

Variable Expenses $200,000 $----------------

Fixed Expenses $170,000 $30,000

Net Operating Income (Loss) $------------- $2,250

Contribution Margin Ratio (percent) %---------- 15%

2- Data concerning Knipp Corporation's single product appear below:

Per unit Percent of sales

selling price--------- $230 100%

variable expenses---- 46 20%

Contribution Margin-- $184 80%

Fixed expenses are $587,000 per month. The company is currently selling 4,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per unit. In exchange, the sales staff would accept a decrease in their salaries of $57,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units.

a) What should be the overall effect on the company's monthly net operating income of this change?

3- The following is last month's contribution format income statement:

Sales (20,000 units)------------- $1,800,000

Variable expenses---------------- $1,200,000

Contribution margin------------- 600,000

Fixed expenses------------------- 400,000

Net operating income----------- $ 200,000

What is the company's break-even in sales dollars?