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8. CVP Analysis and Margin of Safety Aa Aa An excerpt from Hooper Inc.'s annual income statement follows: Hooper Inc. Partial Income Statement Sales $12,000,000
8. CVP Analysis and Margin of Safety Aa Aa An excerpt from Hooper Inc.'s annual income statement follows: Hooper Inc. Partial Income Statement Sales $12,000,000 Cost of merchandise sold 7,520,000 $4,480,000 Gross profit operating expenses $1,320,000 Selling expenses Administrative expenses 2,120,000 Total operating expenses 3,440,000 1,040,000 Income from operations Hooper's sales revenue is based upon having sold 60,000 units at a price of $200.00 per unit while operating at full capacity. Careful analysis by Hooper's accounting staff has revealed that the company's expenses previously listed have both variable and fixed components. The breakdown of Hooper's costs follows: Fixed Variable Cost of merchandise sold 75% 25% 30% Selling expenses 70% 30% Administrative expenses 70%
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