Chapter 6 In-Class Problem Information for Company X, that sells widgets: Selling price of one widget Variable expenses to produce one widget Fixed expenses $435,000 How many units must Company X sell to break even? $250 $105 1. 2. If Company X was currently selling 4,000 units, what is its margin of safety in dollars? 4. At its current sales of 4,000 units, what is Company X's Operating Leverage? Using Company X's Operating Leverage from question #4, if sales were to increase by 20%, by what percent would net operating income increase? Assume Company X began selling a second product, Digits. Information for current year sales of the two products is provided below. Additionally, fixed expenses were $500,000 Widgets Digits Total Per unit Percent Total Per Unit Percent Sales $1,000,000 $250 100% $500,000 $100 100% Variable Expenses 420,000 105 42% 240,000 58 48% Contribution Margin $ 580,000 $145 58% $260,000 $42 52% 6. Compute Company X's weighted average contribution margin ratio