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Game Work Company has been operating for only a few months. The company sells three products - A, B and C. Budgeted sales by product
Game Work Company has been operating for only a few months. The company sells three products - A, B and C. Budgeted sales by product for the coming month are shown below: Total fixed expenses for the month amount to $223,600. Required: Based on the above information, compute 1. The company's overall contribution margin ratio. ( 2 marks) 2. The net operating income. (1 mark) 3. The overall break-even point in sales dollars. ( 2 marks) 4. The sales level in dollars that is required to earn a profit of $104,000. (1 mark) 5. The margin of safety in dollars. (1 mark) 6. The degree of operating leverage. (1 mark) 7. Assume that the actual sales for the month total $500,000 as planned. However, the actual sales mix is: Product A, 32%; Product B, 40%; and Product C, 28%. Explain whether the company will require a higher or lower break-even point compared with the planned breakeven point. (2 marks)
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