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Cyrovan Company (CVC) sells a single product. CVC's revenue and expenses for the last month are as follows: Revenue Variable expenses Contribution margin Fixed expenses
Cyrovan Company (CVC) sells a single product. CVC's revenue and expenses for the last month are as follows: Revenue Variable expenses Contribution margin Fixed expenses Operating income $ $ 1. 2. 3. Total 5. 480,000 $ 208,000 272,000 $ 216,000 56,000 Per Unit Required (where possible complete your work in the space immediately below each question. If you need more space insert additional rows): 30.00 13.00 17.00 What is the monthly break-even point in units and in sales dollars? What is the total contribution margin at breakeven? A computation is not required for this. How many units would have to be sold each month to earn a target profit of $104,000? Prepare a contribution margin format income statement to prove your answer. 4. Redo part 3 but now assume a tax rate of 30%. How many units need to be sold each month to achieve a after tax profit of $95,000? Based on the original data supplied above, what is CVC's current margin of safety in both dollar and percentage terms? 6. If CVC increased sales by $50,000 per month and there is no change in total fixed expenses and variable expenses per unit, what should operating income increase by? 7. If sales were to increase by 15% what should operating income increase by (again no change in total fixed expenses and variable costs per unit)? Use operating leverage to answer this question.
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