1. Tanner Company's most recent contribution format income statement is presented below:

sales 75000

Variable expenses 45000

contribution Margin 30000

Fixed Expenses 36000

Net operating Loss (6000)

The company sells its only product for $15 per unit.

There were no beginning or ending inventories. Required:

a. Compute the company's break-even point in units sold.

b. Compute the total variable expenses at the break-even point.

c. How many units would have to be sold to earn a target profit of $9,000?

d. The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?

2. Deavila Inc. produces and sells two products. Data concerning those products for the most recent month appear below:

Sales Product Q91I 15000Product j53Z 11000

Variable Expenses Product Q91I 5850 Product J53Z 5070

Fixed expenses for the entire company were $13,980. Required:

a. Determine the overall break-even point for the company. Show your work!

b. If the sales mix shifts toward Product Q91I with no change in total sales, what will happen to the break-even point for the company? Explain.

3. Fietsam Corporation's only product sells for $120 per unit. Its current sales are 43,400 units, its break-even sales are 37,324 units and fixed expenses are $74,648. Required: 1. Compute the margin of safety in both dollars and as a percentage of sales. 2. Compute operating leverage. If sales decreases by 10% what will operating income be?