F.d) given the volume increase of 8%, operating income will increase by: in dollars

E F G H Dollars (use the Contribution Margin Ratio to calculate): $ 324,790 =C54/(D48/D39) E. Redo MVP's Contribution Margin Income Statement using the Vice President of Sales (VP) suggestions and projected increase in sales volume below (all amounts should be a formula/link): Reduce selling price by: 5.00% Increase advertising costs by: $ 2,400 Projected sales volume increase: 25.00% Total Amount Units 31,250 Per Unit (C64*C38)+C38 Sales S 445,313 $ 14.25 =C67*D68 =D39-(D39*C62) Hint: This amount represents the new selling price as recommended by the VP. Variable Costs: Direct Materials $ 125,000 4.00 =(C41*$C$64)+C41 =C70/$C$67 Hint: Per unit variable costs are the same as the original income statement as the variable cost per unit Direct Labor 12,000 0.38 =(C42*$C$64)+C42 =C71/$C$67 constant with changes in volume. However, total variable costs will change. Variable Manufacturing Overhead 46,250 1.48 =(C43*$C$64)+C43 =C72/$C$67 Sales Commissions $ 15,625 0.50 =(C44*$C$64)+C44 =C73/$C$67 Shipping $ 3,125 0.10 =(C45*$C$64)+C45 =C74/$C$67 Variable Billing $ 109 0.00 =(C46*$C$64)+46 =C75/$C$67 Total Variable Costs $ 202,109 6.47 =SUM(C70:C75) -SUM(D70:D75) Contribution Margin 243,204 .78 =C68-C76 =C77/C67 Fixed Costs: 79 Fixed Manufacturing Overhead 40,000 C50 80 Advertising 7,200 SUM(C51,C63) Hint: This amount represents the new advertising costs as recommended by the VP. 81 Sales and Admin. Salaries 43,200 C52 82 Fixed Billing 10,000 :C53 83 Total Fixed Costs 100,400 SUM(C79:C82) 84 Net Operating Income (Loss) $ 142,804 C77-C83 85 86 F. Using the budgeted contribution margin income statement in part E. above, calculate the following: 87 a. Breakeven in units: 12,901 =C83/D77 88 b. Operating Leverage Multiplier: 1.70 =(C68-C76)/C84 89 Given a sales volume increase of 8%, operating income will increase by 90 c. Percent: 13.62% =8%*C88 91 d. Dollars: #N/A 92 93 94 95 96 97 98 99 100 101 102 Instructions M5 Project + Ready