Ashley Furniture provided the following

Per unit

Selling price $80

Direct Materials $25

Direct labour $12

Variable overhead $7

Variable marketing expense $4

Fixed marketing expense total $125000 and fixed manufacturing expenses total $ 155,000

A) What is the contribution Margin per unit?

B) What is the contribution Margin ratio?

C) Describe what terms contribution margin per unit and contribution margin ratio mean, and describe the differences between these two concept.

D) What is the variable cost per unit?

E) What is the breakeven point in units? Sales dollar?

F) Assume original facts and sales are currently 10500 units. Compute the margin of safety in dollars and units

G) Assume original facts and sales are currently 10,500 units. Compute the amount of operating leverage

H)Why is the break even point an important concept in management accounting? That is what information does it provide managers ?

I) How many units must the company sell to earn a target income of $116000

J) Henry Payne marketing manager, proposed the company increase the advertising budget by $40000. He suggests this would increase sales by 1500 units. Should the advertising budget be increased? No need of an income statement.