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Requirement 5. By what percentage will operating income change if July's sales volume is 14% higher? Prove your answer. (Round the percentage to two decimal places.) 16.69 % If volume increases 14%, then operating income will increase Prove your answer. (Round the percentage to two decimal places.) Original volume (cartons) Add: Increase in volume New volume (cartons) Multiplied by Unit contribution margin New total contribution margin Less: Fixed expenses New operating income vs. Operating income before change in volume Increase in operating income Percentage change Enter any number in the edit fields and then click Check Answer Clear All WP7-63A (similar to) Question Help 0 Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4,50 per carton of calendars Of the variable expense, 66% is cost of goods sold while the remaining 34% relates to Vanable operating expenses. The company sells each carton of calendars for $19.50 Read the requirements Requirement 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to breakeven Begin by determining the basic income statement equation Sales revenue Fixed expenses Vanable expenses Operating income Using the basic income statement equation you determined above solve for the number of cartons to break even The breakeven sales is 75.000 cartons Requirement 2. Compute the dollar amount of monthly sales Spirit Rock Calendars needs in order to earn $338.000 in operating income Begin by determining the formula Fixed expenses Target operating income Contribution margin ratio = Target sales in dollars (Round the contribution margin ratio to two decimal places The monthly sales needed to earn $338,000 in operating income is 5. 1 900.000 Requirement 3. Prepare the company's contribution margin income statement for June for sales of 465,000 cartons of calendars Spirit Rock Contribution Margin Income Statement Month Ended June 30 Sales revenue $ 9067 500 Vanable expenses Cost of goods sold $ 1381.050 Operating expenses 711.450 2.092,500 Enter any number in the edit helds and then click Check Answer All parts showing CASAN Check Answer Read the required Requirement 3. Prepare the company's contribution margin income statement for June for sales of 465,000 cartons of calendars, Spirit Rock Contribution Margin Income Statement Month Ended June 30 Sales revenue $ 9,067 500 Variable expenses Cost of goods sold $ 1,381,050 Operating expenses 711 450 2.092.500 Contribution margin 6,975 000 Fored expenses 1.125,000 $ 5,850.000 Operating income Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? Begin by determining the formula Sales revenue Sales revenue at breakeven Margin of safety (in dollars) The margin of safety is 5 7,605,000 What is the operating leverage factor at this level of sales? Begin by determining the formula Contribution margin Operating income Operating leverage factor (Round the operating leverage factor to three decimal places) 1.192 The operating leverage factoris Friter any number in the edit fields and then click Check Answer Read the requirements The margin of safety is $ 7,605,000 What is the operating leverage factor at this level of sales? Begin by determining the formula Contribution margin Operating income Operating leverage factor (Round the operating leverage factor to three decimal places) The operating leverage factor is 1.192 Requirement 5. By what percentage will operating income change if July's sales volume is 14% higher? Prove your answer. (Round the percentage to two decimal places) If volume increases 14%, then operating income will increase 16.69 % Prove your answer. (Round the percentage to two decimal places) Original volume (cartons) AddIncrease in volume New volume (cartons) Multiplied by Unit contribution margin New total contribution margin Less: Fisted expenses Nen operating income vs Operating income before change in volume Increase in operating income Percentage change % Enter any number in the edit tields and then click Check Answer 7,605,000 factor at this level of sales? Begin by determining the formula narating income factor Requirements - X S entage id th: opera e perce 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to break even 2. Compute the dollar amount of monthly sales that the company needs in order to earn $338,000 in operating income (round the contribution margin ratio to two decimal places) 3. Prepare the company's contribution margin income statement for June for sales of 465,000 cartons of calendars 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? 5. By what percentage will operating income change if July's sales volume is 14% higher? Prove your answer margi Print Done Shange in volume