Break$-$Even Units, Contribution Margin Ratio, Multiple$-$Product Breakeven, Margin of Safety, Degree of Operating Leverage

Jellico Inc.$\text{'}$s projected operating income $($based on sales of $450,000$ units$)$ for the coming year is as follows:

Line Item Description Total

Sales $ $9,000,000$

Total variable cost $5,850,000$

Contribution margin $ $3,150,000$

Total fixed cost $1,837,500$

Operating income $ $1,312,500$

Required:

$1($a$).$ Compute variable cost per unit. Enter your answer to the nearest cent.

fill in the blank $1$ of $1$$per unit

$1($b$).$ Compute contribution margin per unit. Enter your answer to the nearest cent.

fill in the blank $1$ of $1$$per unit

$1($c$).$ Compute contribution margin ratio. Enter to one decimal point.

fill in the blank $1$ of $1\%$

$1($d$).$ Compute break$-$even point in units. Reminder: round$-$up to ensure partial units are completed.

fill in the blank $1$ of $1$ units

$1($e$).$ Compute break$-$even point in sales dollars.

fill in the blank $1$ of $1$$

$2.$ How many units must be sold to earn operating income of $$65,625?$ Reminder: round$-$up to ensure partial units are completed.

fill in the blank $1$ of $1$ units

$3.$ Compute the additional operating income that Jellico would earn if sales were $$50,000$ more than expected.

fill in the blank $1$ of $1$$

$4.$ For the projected level of sales, compute the margin of safety in units, and then in sales dollars.

Line Item Description Answer

Margin of safety in units fill in the blank $8$ units

Margin of safety in sales dollars $fill in the blank $9$

$5.$ Compute the degree of operating leverage. Round your answer to two decimal place.

fill in the blank $1$ of $1$

$6.$ Compute the new operating income if sales are $10\%$ higher than expected. Enter your answer to the nearest whole dollar.

fill in the blank $1$ of $1$$