1. The following is Alsatia Corporation's contribution format income statement for last month:

Sales------------------ $ 1,400,000

variable expenses----------- 900,000

Contribution Margin -------- 500,000

Fixed expenses-------------- 300,000

Net Operating income---------$ 200,000

The company has no beginning or ending inventories and produced and sold 10,000 units during the month.

Required:

a) What is the company's contribution margin ratio?

b) What is the company's break-even in units?

c) If sales increase by 100 units, by how much should net operating income increase?

d) How many units would the company have to sell to attain target profits of $225,000?

e) What is the company's margin of safety in dollars?

f) What is the company's degree of operating leverage?

2- Schalger corporation makes a product with the following standard costs.

Inputs------------------ Standard Quantity or hours Standard Price or rate

Direct Materials-------------- 7.8 Kilos $1.00 per kilo

Direct Labor------------------- 0.4 Hours $18.00 per hour

Variable Overhead----------- 0.4 Hours $3.00 per hour

The company reported the following results concerning this product in August.

Actual output----------------------------- 8500 units

Raw materials used in production--------------- 65,550 Kilos

Purchases of raw materials----------------- 69,000 kilos

Actual Direct labor-hours--------------- 3,410 hours

Actual cost of raw materials purchases---------- $75,900

Actual Direct Labor cost------------------ $ 66, 495

Actual variable overhead cost ----------- $ 9,889

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

1. Compute the materials quantity variance.

2. Compute the materials price variance.

3. Compute the labor efficiency variance.

4. Compute the direct labor rate variance.

5. Compute the variable overhead efficiency variance.

6. Compute the variable overhead rate variance.

3- The Wright Company has a standard costing system. The following data are available for September:

Actual quantity of direct materials purchased	40,000	pounds
Standard price of direct materials	$8	per pound
Material price variance	$4,000	unfavorable
Material quantity variance	$3,500	favorable

a) The actual price per pound of direct materials purchased in September is:

b) The Actual standard quantity of direct materials is:

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

	Case 1	Case 2
Units Sold	2,500
Sales	$62,500	$450,000
Variable Expenses	$	$150,000
Fixed Expenses	$35,000	$
Net Income (LOSS)	($17,500)	$75,000
Contribution Margin Per Unit	$	$30

5- 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%

6- A manufacturer of tiling grout has supplied the following data:

Kilograms produced and sold	310,000
Sales revenue	$1,940,000
Variable manufacturing expense	$959,000
Fixed manufacturing expense	$264,000
Variable selling and administrative expense	$357,000
Fixed selling and administrative expense	$230,000
Net operating income	$130,000

Prepare a contribution income statement with the above information:

The Companys contribution margin is:

The Companys variable expense ratio is:

The company's contribution margin ratio is: