Question
Athletico Inc. manufactures warm-up suits. The companys projected income for the coming year, based on sales of 160,000 units, is as follows: Sales $ 8,000,000
Athletico Inc. manufactures warm-up suits. The companys projected income for the coming year, based on sales of 160,000 units, is as follows: Sales $ 8,000,000 Operating expenses: Variable expenses $ 2,000,000 Fixed expenses 3,000,000 Total expenses 5,000,000 Net income $ 3,000,000 2. Calculate the firms break-even point for the year in sales dollars. 3. What is the companys margin of safety for the year? 4. Compute Athleticos operating leverage factor, based on the budgeted sales volume for the year. 5. Compute Athleticos required sales in dollars in order to earn income of $4,500,000 in the coming year. 6. Show the Athleticos cost structure and indicate the percentage of the Athleticos revenue represented by each item on the income statement.
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