Danas Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette	$	1.60
Sales price per rosette		3.00
Total fixed costs per month		889.00

Required:

1.

Suppose Danas would like to generate a profit of $800. Determine how many rosettes it must sell to achieve this target profit. (Round your intermediate calculations to 2 decimal places and final answer up to next whole number.)

Target Units

1,206

2.

If Danas sells 1,100 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales. (Round your intermediate calculations, Margin of Safety in Dollars and percentage answers to 2 decimal places.)

Margin of Safety (Units)	465	Rosettes
Margin of Safety in Dollars	$1,395.00
Percentage of Sales	42.27	%

3.

Calculate Danas degree of operating leverage if it sells 1,100 rosettes. (Round your intermediate calculations to 2 decimal places and final answer to 4 decimal places.)

Degree of Operating Leverage

?

4.

Using the degree of operating leverage, calculate the change in Danas profit if unit sales drop to 935 units. Confirm this by preparing a new contribution margin income statement. (Round your intermediate calculations to 4 decimal places and final answer to 2 decimal places.)

Contribution Margin Income Statement
For 935 Rosettes
Sales Revenue	?
Variable Costs	?
Contribution Margin	$1,309
Fixed Costs	889
Income from Operations	$420