Question
a. Whirly Corporations contribution format income statement for the most recent month is shown below: Total Per Unit Sales (8,400 units) $ 277,200 $ 33.00
a. Whirly Corporations contribution format income statement for the most recent month is shown below:
Total | Per Unit | |||||
Sales (8,400 units) | $ | 277,200 | $ | 33.00 | ||
Variable expenses | 151,200 | 18.00 | ||||
Contribution margin | 126,000 | $ | 15.00 | |||
Fixed expenses | 54,600 | |||||
Net operating income | $ | 71,400 | ||||
Required:
(Consider each case independently):
1. What would be the revised net operating income per month if the sales volume increases by 30 units?
2. What would be the revised net operating income per month if the sales volume decreases by 30 units?
3. What would be the revised net operating income per month if the sales volume is 7,400 units?
b. Mauro Products distributes a single product, a woven basket whose selling price is $20 per unit and whose variable expense is $14 per unit. The companys monthly fixed expense is $6,600.
Required:
1. Calculate the companys break-even point in unit sales.
2. Calculate the companys break-even point in dollar sales. (Do not round intermediate calculations.)
3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
c. Lindon Company is the exclusive distributor for an automotive product that sells for $24.00 per unit and has a CM ratio of 30%. The companys fixed expenses are $118,800 per year. The company plans to sell 18,100 units this year.
Required:
1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)
2. What is the break-even point in unit sales and in dollar sales?
3. What amount of unit sales and dollar sales is required to attain a target profit of $46,800 per year?
4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2.40 per unit. What is the companys new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $46,800?
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