E$6-12($Algo$)$ Calculating Target Profit, Margin of Safety, Degree of Operating Leverage $[$L$06-2,6-3,6-4,6-5]$

Dana's Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette

Sales price per rosette

$$1\mathrm{.}50$

$3\mathrm{.}00$

$3000\mathrm{.}00$

Total fixed costs per month

Required:

Suppose Dana's would like to generate a profit of $$840.$ Determine how many rosettes it must sell to achieve this target profit.

If Dana's sells $3,200$ rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

Calculate Dana's degree of operating leverage if it sells $3,200$ rosettes.

a$.$ Using the degree of operating leverage, calculate the percentage change in Dana's profit if unit sales drop to $2,880$ units.

b$.$ Prepare a new contribution margin income statement to verify change in Dana's profit.

Complete this question by entering your answers in the tabs below.

Reg $1$

Req $2$

Req $3$

Req $4$A

Req $4B$

Suppose Dana's would like to generate a profit of $$840.$ Determine how many rosettes it must sell to achieve this target profit.

Note: Round your intermediate calculations to $2$ decimal places and round your final answer up to nearest whole number.

Target Units