CVP discussion (1) - Word Search Lionel Estrada Design Layout References Mailings Review View Help Voltar Company manufactures and sells a specialized cordless telephone for high electromagnetic radiation environments. The company's contribution format income statement for the most recent year is given below: Total Per Unit Percent of Sales Sales (20,000 units) $1,200,000 $60 100% Variable expenses 900,000 45 7 % Contribution margin 300,000 $ 15 ? % Fixed expenses 240,000 Net operating income $ 60,000 Management is anxious to increase the company's profit and has asked for an analysis of a number of items. Using the data above answer questions 1-6. Required: Questions 1-5 are 2 points each 1. Compute the company's CM ratio and variable expense ratio. 2. Compute the company's break-even point in both unit sales and dollar sales. Use the equation method 3. Assume that sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? 4. Assume that next year management wants the company to earn a profit of at least $90,000. How many uni have to be sold to earn this target profit? 5. Compute the company's margin of safety in both dollar and percentage form. Focus ch il Prisen Home End Pgu 590 5 6 & 7 9 0