Chapter 6: CVP/Break-even/Contribution Margin

Laraia Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

	Sales (9,000 units)	$270,000
	Variable expenses	189,000
	Contribution margin	81,000
	Fixed expenses	77,400
	Net operating income	$3,600

Required:

What is the contribution margin per unit?

What is the contribution margin ratio?

What is the variable expense ratio?

If sales increase to 9,040 units, what would be the estimated net operating income?

If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income?

If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 1,200 units, what would be the estimated net operating income?

What is the break-even point in unit sales?

What is the break-even point in dollar sales?

Estimate how many units must be sold to achieve a target profit of $26,100.

What is the margin of safety in dollars?

What is the degree of operating leverage?