2.2(12 marks) Cost-Volume-Profit - Chapter 4

Regency Productions imprints calendars with college and university names. The company has fixed expenses of $1,045,000 each month plus variable expenses of $3.90 per carton of calendars. Of the variable expense, 66% or 2/3rds is cost of goods sold. The remaining 34% relates to variable operating expenses.Regency Productions sells each carton of calendars for $11.50.

Required:

1. What is the break-even amount in number of cartons of calendars that Regency must sell each month?

1. What is the amount of monthly sales (in dollars) Regency needs in order to earn a target income of $275,000? (round the contribution margin ratio to two decimal places).

1. Prepare Regency Production's Contribution Margin Income Statement for the month of June, 2021 for sales of 460,000 cartons of calendars.

1. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales?

1. By what percentage will operating income change if July's sales volume is 10% higher. Show details.