Homework 1 NMENT Longhorn TV presents the table below for contribution margin per unit, total contribution margin, and contribution margin ratio. In the space provided calculate each for scenario A, B and C. How much would net income increase if another 100 units were sold in scenario A? Number of units Sales price per unit Variable Cost per unit 1,400 $1,200 $ 610 B 9,500 $3,700 $ 880 5.620 $4.550 $ 1,665 Calculate Contribution margin per unit Total contribution margin Contribution margin ratio $590 49.17% For scenario A, how much would net income increase if another 100 units were sold? 100 x $590 = $59,000 Homework 2 Owner Joan Garcia is considering franchising her Soup World restaurant concept. She believes customers will pay $9.00 for a large bowl of soup. Variable costs are $3.00 per bowl. Joan estimates monthly fixed cost for a franchise at $9,500. Requirement 1 - Use the contribution margin ratio to find a franchise's breakeven sales in dollars. Formula to use: Calculations: $9,500/66.67%= $ 14,249 in sales to breakeven $6/$9 (see OR middle of page 3) Requirement 2 - Joan believes most locations could generate $37,000 in monthly sales. Is franchising a good idea for Joan if franchisees want a minimum monthly operation income target profit) of $14,500? Formula to use: Calculations: = $2.required Sales Yes, it is a good idea since required sales to hit the target of $14,500 is less than the expected month sales of $37,000