Golden Wolves Statue Company

Cost-Volume-Profit Relationships (Milestone #4) 60 points

The large forward-facing statues in Job 3 sold at the following prices:

900 large forward-facing statues - $150/ statue

Golden Wolves Statue Company would like to stop manufacturing the small and large profile statues and only sell the large forward-facing statue. The companys contribution format income statement for sales of this statue in 2017 is given below assuming that all fixed expenses are now assigned to this statue:

TotalPer unit% of salesSales (900 units)$135,000$150.00100%Variable Expenses$ 11,985 13.32? %Contribution Margin$123,015$136.68? %Fixed Expenses $ 18,535 Net Operating Income $104,480

Step 1: Compute Golden Wolves Statue Companys contribution margin ration and variable expense ratio. (10 points each)

Step 2: Compute Golden Wolves Statue Companys break-even point in both unit sales and dollar sales using the equation method. (10 points each)

Step 3: Assume that sales of the large forward-facing statue increase by $6,000 next year. If cost behavior patterns remain unchanged, by how much will the companys net operating income increase due to sales of this statue? Use the contribution margin ratio to compute your answer. (10 points)

Step 4: Refer to the original data. Assume that Corey wants the company to earn a profit of at least $130,000 next year. How many units will have to be sold to earn this target profit? (10 points)