2 3 4 D E acts Company distributes a high-quality squirrel feeder. The following data have been provided Original data: Selling price per unit $45 Variable cost per unit $27 Total annual fixed costs $360,000 04 7 8 Required: 9 1. What is the company's contribution margin per unit? (1 mark) 10 11 contribution margin $18.00 12 sales $45.00 13 Contribution margin ratio $0 14 15 2. What is the break-even point in units? (1 mark) 16 17 fixed expense $360,000.00 unit contribution margin $18.00 20,000 Break-even point in units 20 21 3. If sales are estimated to increase by New $172,000, by how much should Chat 20,000 If sales are estimated to increase by $172,000. by how much should operating income increase? 12 m sales variable expense Increase in operating income $172,045 2700% 21 3. 22 23 24 25 26 27 4. 28 29 30 31 32 33 Determine the total sales in dollar the company have to sell to earn $55,000 in operating in Sales dollars required 34 35 5. Assume that the operating results for last year were as follows: 30 32 Sales $1,350,000 38 Ciable costs 810.000 540,000 7 Sales 8 Variable costs $1,350,000 9 Contribution margin 800.000 10 Fixed costs 540,000 11 360,000 Operating income $180,000 42 43 a) Compute the degree of operating leverage for last year. (2 marks) 44 45 contribution margin 540,000 46 operating income 180,000 47 Degree of operating leverage 3.00 48 20% next year. By what percent is open 49 b) The president expects sales to increase 300% 51 degree of operating leverage 20% 52 %change in sales 60.00% 53 Percentage increase in operating income 54 6 Refer to the original data and the income statement from part 5 based on 30,000 Percentage increase in operating income 60.00% 6. Refer to the original data and the income statement from part 5 based on 30,000 units sold. The sales manager is 16% increase in variable expenses per unit due to better quality materials, combined with a $35.000 increase in a cause annual sales in units to increase by 45%. Would you recommend that the company do as the sales manager 3 Extra spa Original Change New 0 1 52 53 64 65 66 Operating income 67 68 69 Decision: 70 $45.00 $27.00 $18 even point in units? (1 mark) $360,000.00 $18.00 20,000 margin nt in units $172,000, by how much should operating income increase? 12 marts amateu to increase by $172,045 40% $68,818 $55.000 in operating co pense operating income ) ne the total sales in dollar the company have to sell to earn 1 New. % 5 $ 4 ? # 3 2 3 4 D E acts Company distributes a high-quality squirrel feeder. The following data have been provided Original data: Selling price per unit $45 Variable cost per unit $27 Total annual fixed costs $360,000 04 7 8 Required: 9 1. What is the company's contribution margin per unit? (1 mark) 10 11 contribution margin $18.00 12 sales $45.00 13 Contribution margin ratio $0 14 15 2. What is the break-even point in units? (1 mark) 16 17 fixed expense $360,000.00 unit contribution margin $18.00 20,000 Break-even point in units 20 21 3. If sales are estimated to increase by New $172,000, by how much should Chat 20,000 If sales are estimated to increase by $172,000. by how much should operating income increase? 12 m sales variable expense Increase in operating income $172,045 2700% 21 3. 22 23 24 25 26 27 4. 28 29 30 31 32 33 Determine the total sales in dollar the company have to sell to earn $55,000 in operating in Sales dollars required 34 35 5. Assume that the operating results for last year were as follows: 30 32 Sales $1,350,000 38 Ciable costs 810.000 540,000 7 Sales 8 Variable costs $1,350,000 9 Contribution margin 800.000 10 Fixed costs 540,000 11 360,000 Operating income $180,000 42 43 a) Compute the degree of operating leverage for last year. (2 marks) 44 45 contribution margin 540,000 46 operating income 180,000 47 Degree of operating leverage 3.00 48 20% next year. By what percent is open 49 b) The president expects sales to increase 300% 51 degree of operating leverage 20% 52 %change in sales 60.00% 53 Percentage increase in operating income 54 6 Refer to the original data and the income statement from part 5 based on 30,000 Percentage increase in operating income 60.00% 6. Refer to the original data and the income statement from part 5 based on 30,000 units sold. The sales manager is 16% increase in variable expenses per unit due to better quality materials, combined with a $35.000 increase in a cause annual sales in units to increase by 45%. Would you recommend that the company do as the sales manager 3 Extra spa Original Change New 0 1 52 53 64 65 66 Operating income 67 68 69 Decision: 70 $45.00 $27.00 $18 even point in units? (1 mark) $360,000.00 $18.00 20,000 margin nt in units $172,000, by how much should operating income increase? 12 marts amateu to increase by $172,045 40% $68,818 $55.000 in operating co pense operating income ) ne the total sales in dollar the company have to sell to earn 1 New. % 5 $ 4 ? # 3