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

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

	Total
Sales	$ 9,000,000
Total variable cost	6,030,000
Contribution margin	$ 2,970,000
Total fixed cost	1,816,980
Operating income	$ 1,153,020

Required:

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

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

1(c). Compute contribution margin ratio. ______ %

1(d). Compute break-even point in units. _____units

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

2. How many units must be sold to earn operating income of $235,620? _____units

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

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

Margin of safety in units	______	units
Margin of safety in sales dollars	$_______

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

______

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