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1 John's Construction Supply and Equipment (CSE) sells construction supplies to contractors. In 2023, they prepared the following contribution format income statement based on a
1 John's Construction Supply and Equipment (CSE) sells construction supplies to contractors. In 2023, they prepared the following contribution format income statement based on a sales volume of 5,000 units, which is within the relevant range of 4,000 to 6,000 units sold. Sales (5,000 units) Variable Costs Contribution Margin Fixed Costs Net Operating Income Totals Per Unit $400,000 $220,000 $180,000 $150,000 $30,000 Ratios Unless otherwise specified, each question refers to the original data. Please label your answers with the letter of the question you're answering. a. Fill in the columns above with the relevant per unit amounts and the ratios (in percentage form). b. If sales increase to 5,600 units, what would be the estimated increase in net operating income? c. If sales decrease to 4,700 units, what would be the estimated decrease in net operating income? d. Both the selling price and variable cost decrease by $5 per unit and the sales volume increases by 700 units. Prepare a new contribution format income statement. What is the new contribution margin ratio? e. If the variable cost per unit increases by $4, spending on advertising increases by $10,000, and unit sales decrease by 250 units, what is the estimated net operating income? f. What is the break-even point in unit sales? g. What is the break-even point in dollar sales? Use the formula method to find it. h. Without using calculations, find the contribution margin at the break-even point. i. How many units must be sold to achieve a target profit of $100,000? j. What is the degree of operating leverage? k. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales volume
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