Cerling company produces a variety of chemicals. One division makes reagents for laboratories. the division's projected income statement for the coming year is

sales 218000 X price $ 60.00 13080000

total var. cost. 7630000

contrb. margin 5450000

total fixed cost 4250000

operating income 1200000

Part 1

Contribution margin $5,450,000

Sales in units 13,080,000

Unit contribution margin

Total fixed cost $4,250,000

Unit contribution margin

Break-even units

Unit contribution margin

Sales price per unit $60

Contribution margin ratio

Sales price per unit $60

Break-even units

Break-even sales

Part 2

Increase in revenues

Contribution margin ratio

Increased contribution margin

Increase in advertising costs $250,000

Increased operating income

Part 3

Sales exceeding estimate $1,500,000

Contribution margin ratio

Underestimated profits

Part 4

Sales $13,080,000

Break-even sales

Margin of safety in dollars

Part 5

Contribution margin $5,450,000

Operating Income $1,200,000

Operating leverage

Higher percentage of sales 8%

Operating leverage

Increase in operating income