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Baxtell Company manufactures and sells a single product. The following costs were incurred during the company s first year of operations: JenStar manufactures and sells
Baxtell Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations: JenStar manufactures and sells a single product. The following information is available regarding sales and costs for the last quarter of the year:
a What is the contribution margin per unit?
Contribution margin per unit $
b What is the company's CM ratio? Please make sure your final answers are in percentage form and are accurate to the nearest whole percent. For example:
c What is the quarterly breakeven point in units?
Breakeven point in units units
d What is the quarterly breakeven point in dollars?
Breakeven point in dollars $
e How many units would have to be sold each quarter to earn a target profit of $
f Verify your answer in e by preparing a contribution margin income statement at the target sales level.
g Refer to the original data. Compute the company's margin of safety in dollars.
Margin of safety $
h Refer to the original data. Compute the company's margin of safety percentage. Please make sure your final answers are in percentage form and are accurate to the nearest whole percent. For example:
i If sales increased by $ per quarter and there is no change in fixed costs, by how much would you expect quarterly operating income to increase?
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