Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Carla Vista sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month

image text in transcribedimage text in transcribedimage text in transcribed

Carla Vista sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: Total Per Unit Sales revenue $650,000 $50 Variable expenses 227,500 17.50 Contribution margin 422,500 $32.50 Fixed expenses 266,500 Operating income $ 156,000 (a) What is Carla Vista's contribution margin ratio? Its variable cost ratio? (Round ratios to 2 percentage places, eg. 0.38 = 38%.) Contribution margin ratio % Variable cost ratio % (61) Compute breakeven sales. (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.) $ Breakeven sales e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (62) What is Carla Vista's margin of safety? $ Margin of safety (c) If Carla Vista's sales were to increase by $200,000 with no change in fixed expenses, by how much would operating income increase? (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.) $ Net Operating income will increase by e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (d). Carla Vista's managers have determined that variable costs per unit will increase by 18% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Carla Vista sells. What will be Carla Vista's expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places eg. 52.75 and final answer to 0 decimal places, e.g. 5,275.) $ Operating income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Auditor An Instructional Novella

Authors: James K. Loebbecke

1st Edition

0130799769, 978-0130799760

More Books

Students also viewed these Accounting questions

Question

What are some differences between LAN and WAN management?

Answered: 1 week ago

Question

What is meant by 'Wealth Maximization ' ?

Answered: 1 week ago