Abby Company manufactures and sells widgets. Current sales are 60,000 units.

Sales $90/unit

Variable Expenses 60/unit

Fixed Costs $1,000,000

REQURIED: (If need be, round to nearest unit or dollar)

1) Compute CM Ratio and Variable Expense Ratio

2) Compute Break-Even point in Units AND Dollars

3) How many units must be sold to earn a profit of $350,000?

4) Compute the Degree of Operating Leverage

5) If we gain 8% of sales, what % would Operating Income change (Use Operating Leverage)

6) Compute the Margin of Safety in $ AND %.

7) We want to improve profits so we are raising the sales price by $10.00 and reducing Variable Expenses by $3.00 and eliminating out $100,000 of Fixed Costs.

a) Determine new B/E Point in Units AND Dollars