1 ASSUMPTIONS Siddique, Salina: Update the Assum data from the Proj the "Project Descr Product: Strike and Run: Revenue per unit Total Variable costs of Goods Sold Total Fixed Costs of Goods Sold Total Variable Selling and Administration Expenses Total Fixed Selling and Administration Expenses Denver $35 $60,000 $70,000 $40,000 $30,000 El Paso $35 $130,000 $0 $50,000 $20,000 Quarterly volume of units sold in the fourth quarter 20Y1 $20,000 $20,000 2 Projected Contribution Margin based Income Statement For Fourth quarter 2011 Sales Total Variable costs Contribution margin Total Fixed costs Net income Denver $ $700,000 $100,000 $600,000 $100,000 $500,000 El Paso $ Answer check $700,000 Correct $180,000 Correct $520,000 Correct $20,000 Correct $500,000 Correct 3 Variable Cost per unit Contribution Margin per unit Break Even units Break Even sales Margin of Safety percentage Operating Leverage $5 $30 3,334 $116,690 83.33% 1.20 $9 Correct $26 Correct 770 Correct $26,950 Correct 96.15% Correct 1.04 Correct 4 Sensitivity Analyis Conservative scenario: Sales decrease by 40% than the projected sales -40% Net Income under conservative scenario: $260,000 $292,000 Correct Optimistic scenario: Sales increase by 40% than the projected sales 40%) $740,000 Net Income under optimistic scenario: 5. Explanation