2-10 CAS CHLI-7 PROBLEN I (26 Points) The following data is available for the Pilgrim Company and its only product, turkeys Total $84,000 23.000 boo0 s.So 51,000 34.000 $17.000 Sales (6,000 units) Variable expenses Contribution margin Fixed expenses Net income bo00 14 REQUIRED: show your work. Compute the following cost-volume-profit analyses. Be sure to a) Without resorting to calculations, what is the total contribution Bargin at the break-even point? 1-7 34,00 What is the contribution margin per unit? b) 14-5.S0 = 8.50 %3D What is the contribution ratio? c) 8.0%4= 60.7% i8.50 What is the break-even point in units? d) 1 34,000 4000 UNITS 3 (3) 8.50 dsogoon e) What is the break-even point in sales dollars? 4000 X $14="Sb,000 How many turkeys does Pilgrin have to sell in order to ake a $51,000 f) profit? 85000 34,000+ S1,000 3) 1000 UNITS 8.50 8.50 2-11 OH6a1-8 PROBLEH I (Continued) What is'the operating leverage at the current sales amount? g) S,000 17,000 If sales increase 254, how much in dollars will net income increase? h) 252x 3 TOF1275D2 USE THE FOLLOWING INFORMATION FOR PARTS (1) - (k)i Assume that Pilgrin is currently selling 6,000 turkeys. Management wants to increase sales and feels this can be done by cutting the selling price by $2 per unit and increasing the advertising budget by $10,000. Managenent believes that these actions will increase unit sales by 50 percent. 1) What will be the new contribution margin per unit? 14-2= 12 S.50 SALES VAR EXP. 6.50 1) Prepare an incremental analysis to determine whether managenent should incorporate the changes. CONTRIBUTION MARGIN 6.So x 6o0x1,50 = 1-2 S8, S00 %3D CESS FIXED cosor 34,000 + 10 o0o (44,000) 3-y NET INCOmf 14, S00 Should management implement these changes? k) 1-2 Please circle: Yes No or NET INCOME WOULD J'asoo