1. Racing Bicycle Company produces and sells bicycles. Answer each of the following questions (You must record your answer process)

Sales (total 500 units sold)	$ 500,000	$ 1,000
variable cost	300,000	600
Contribution Margin	200,000	400
fixed cost	100,000
Net operating income	100,000

1) Compute CMR

2) Compute BEP (Break-even-point) Units.

3) Compute BEP (Break-even-point) sales

Racing Bicycle Company will generate an increase in units from 500 to 600 (following 4~7) problem).

4) Compute Sales

5) Compute CMR (Contribution margin ratio)

6) Compute CM (Contribution margin), (you must use Sensitivity analysis I formula)

7) Compute OI (Operating income)

8) Compute DOL (Degree of operating leverage) at current sales level ($500,000)

9) If sales of RBC increase by 10% (current sales: $500,000), how much does Operating income ($) increase? (you must use Sensitivity analysis II formula).