Case Problem:

You were employed just this morning by Crackers Company, a prominent and rapidly growing organization. It is asked that an analysis of one of the company's products for the board of directors meeting later in the day. After completing the analysis, out of enthusiasm, you spilt a bottle of black refill ink on your work and you were only able to decipher a few data:

Crackers Company

Income Statement

For the month ended February 200B

Total

Per Unit

%

Sales ( ? units)

?

?

?

Less Variable Expenses

?

?

?

Contribution Margin

?

?

?

Less Fixed Expenses

?

Net Income

?

Breakeven pointIn units: ?

In pesos P180,000

Margin of Safety In pesos ?

In %20%

Degree of Operating Leverage?

The computations above are all based on actual results for February. The company's projected income statement for this product for March follows

Crackers Company

Income Statement

For the month ended March 200B

Total

Per Unit

%

Sales ( 33,000 units)

?

?

?

Less Variable Expenses

?

?

?

Contribution Margin

?

?

?

Less Fixed Expenses

?

Net Income

P40,500

Breakeven pointIn units: ?

In pesos ?

Margin of Safety In pesos ?

In %?

Degree of Operating Leverage?

To add to your woes, the company's computer is being repaired so no data are available from that source. You do remember that sales for March are projected to increase by 10% over sale for February. You also remember that February's net income was P27,000 - the same amount as your monthly salary and that total fixed expenses, unit selling price and unit variable expenses are planned to be the same in March as they were in February.