Dimitrov Corporation, a company that produces and sells a single product, has provided its contribution format income statement for July.

Sales (9,700 units)	$ 611,100
Variable expenses	329,800
Contribution margin	281,300
Fixed expenses	148,500
Net operating income	$ 132,800

If the company sells 8,700 units, its net operating income should be closest to:

$132,800

$119,109

$103,800

$69,800

James Company has a margin of safety percentage of 19% based on its actual sales. The break-even point is $370,000 and the variable expenses are 39% of sales. Given this information, the actual profit is (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.):

$42,883

$27,417

$52,942

$43,383

Olis Corporation sells a product for $210 per unit. The product's current sales are 29,700 units and its break-even sales are 25,921 units. What is the margin of safety in dollars?

$793,590

$25,921

$25,143

$6,237,000

Laro Corporation produces and sells a single product with the following characteristics:

	Per unit	Percent of sales
Selling price	$ 250	100%
Variable expenses	125	50%
Contribution margin	$ 125	50%

The company is currently selling 6,000 units per month. Fixed expenses are $332,000 per month.

The marketing manager believes that a $8,000 increase in the monthly advertising budget would result in a 210 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

increase of $18,250

decrease of $8,000

decrease of $18,250

increase of $26,250

Candice Corporation has decided to introduce a new product. The product can be manufactured using either a capital-intensive or labor-intensive method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows:

	Capital-Intensive				Labor-Intensive
Variable manufacturing cost per unit		$	14.00			$	17.60
Fixed manufacturing cost per year		$	2,536,000			$	1,365,600

The company's market research department has recommended an introductory selling price of $30 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $600,000. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured.

Required:
a.	Calculate the break-even point in units if Candice Corporation uses the (Do not round intermediate calculations.):

	Break-even point in units
Capital-intensive manufacturing method
Labor-intensive manufacturing method

b.	Determine the unit sales volume at which the net operating income is the same for the two manufacturing methods. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Sales volume

c.	Assuming sales of 390,000 units, what is the degree of operating leverage if the company uses the: (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Degree of operating leverage
Capital-intensive manufacturing method
Labor-intensive manufacturing method

d.

What is your recommendation to management concerning which manufacturing method should be used, if the sales volume is in excess of the one calculated under Requirement (b)?

	Labor-intensive manufacturing method
	Capital-intensive manufacturing method