I need help answering questions 8, 9, 10, and 11. Thank you in advance

DATA: Quantity (in units) Sales Variable Costs Contribution Margin Fixed Costs Income Before Taxes Income Taxes (32% Rate) Net Income Regular 1) Selling Price per Unit Variable Cost per Unit Contribution Margin (Dollars) Contribution Margin (Units) Regular $ $ $ Simplified 4.00 $ 3.00 3.20 $ 2.10 0.80 $ 0.90 115,200 162,000 2) Unit Contribution Margin Unit Selling Price Contribution Margin Ratio Regular $ $ Simplified 0.80 $ 0.90 4.00 $ 3.00 20% 30% 3) Fixed Costs Unit CM Breakeven Point (Cups of Yogurt) CM Ratio Breakeven Point (Dollars) Regular Simplified $ 36,000 $ 66,000 $ 0.80 $ 0.90 45,000 73,333 20% 30% $ 180,000 $ 220,000 4) Contribution Margin Income Before Taxes Operating Leverage Regular Simpified $ 115,200 $ 162,000 $ 79,200 $ 96,000 1.45 1.69 $ $ $ $ $ $ $ Simplified 144,000 180,000 576,000 $ 540,000 460,800 $ 378,000 115,200 $ 162,000 36,000 $ 66,000 79,200 $ 96,000 25,344 $ 30,720 53,856 $ 65,280 Leverage is used to analyze the changes income. The ratio is useful in helping ma the effects that a level of operating lever for a firm. The higher the operating leve potential risk if sales decreases. The low leverage, the the less risk occurs if sales ed to analyze the changes in a company's sales atio is useful in helping management to ascertain t a level of operating leverage has on the earnings higher the operating leverage, the more the f sales decreases. The lower the operating he less risk occurs if sales were to decrease. Yummy -Tummy Yogurt Contribution Margin Income Statement For Year Ending in December 31, 2017 Regular Sales $ 1,430,000 Variable Costs $ 1,144,000 Contribution Margin $ 286,000 Fixed Costs $ 36,000 Income Before Tax $ 250,000 Income Tax Rate (32%) $ 80,000 After-Tax Net Income $ 170,000 Fixed Costs Target Net Income Tax Rate (1-32%) Unit CM Required Sales in Cups of Yogurt CM Ratio Required Sales in Dollars Simplified $ 1,053,333 $ 737,333 $ 316,000 $ 66,000 $ 250,000 $ 80,000 $ 170,000 $ $ Regular 36,000 170,000 0.68 0.80 357,500 Simplified $ 66,000 $ 170,000 0.68 $ 0.90 $ 351,111 $ 20% 1,430,000 30% 1,053,333 $ $ $ Yummy -Tummy Yogurt Contribution Margin Income Statement For Year Ending in December 31, 2017 Regular Simplified Sales $ 460,800 $ 432,000 Variable Costs $ 368,640 $ 302,400 Contribution Margin $ 92,160 $ 129,600 Fixed Costs $ 36,000 $ 66,000 Income Before Tax $ 56,160 $ 63,600 Income Tax Rate (32%) $ 17,971 $ 20,352 After-Tax Net Income $ 38,189 $ 43,248 Yummy -Tummy Yogurt Contribution Margin Income Statement For Year Ending in December 31, 2017 Regular Simplified Sales $ 691,200 $ 648,000 Variable Costs $ 552,960 $ 453,600 Contribution Margin $ 138,240 $ 194,400 Fixed Costs $ 36,000 $ 66,000 Income Before Tax $ 102,240 $ 128,400 Income Tax Rate (32%) $ 32,717 $ 41,088 After-Tax Net Income $ 69,523 $ 87,312 ACCT 102 Yummy-Tummy Yogurt Husband and wife, Daryl and Deidre Dairy, decided to start their own business, bringing a healthy dessert choice to their local community. Together they have started Yummy-Tummy Yogurt, an organic yogurt store that offers a single size yogurt cup with one topping per serving. Daryl is the food guy, having his degree in culinary arts and experience in food preparation. He is responsible for ordering the product based on the choices offered each week, as well as maintaining public food services requirements. Deidre manages the store- the employees, accounting and advertising. In its first year of operations the company sold 144,000 cups of yogurt and had the below sales and cost figures. Sales Variable costs Contribution margin Fixed costs Income before taxes Income taxes (32% rate) Net income $ 576,000 460,800 115,200 36,000 79,200 25,344 $ 53,856 The husband and wife team know that another challenging and competitive year lies ahead of them. Now entering their second year of operations, they are considering two alternatives and have hired your consulting group, known for its inventive business and accounting consulting work, to help them make some important business decisions. 1 ACCT 102 Yummy-Tummy Yogurt Alternative 1 -Simplified Facing stiff competition and economic downturn, Yummy-Tummy Yogurt (YTY) is considering simplifying its current store's yogurt selection. This means YTY would offer a reduced yogurt portion (in a smaller cup) and fewer topping choices. YTY would have to charge a lower price, but Daryl and Deidre believe that the lower yogurt price will increase their customer base -allowing teenagers, senior citizens, and large families to purchase their product. Also, the reduced portion and topping choices will be considerably less expensive than offering a plethora of choices in a larger cup. This will decrease YTY's variable costs. There will however be an increase of $30,000 in the fixed costs for advertising to inform the public of this change. The financial information is presented below, assuming 144,000 cups are sold using the regular scenario and 180,000 cups are sold under the simplified yogurt store scenario due to the greater number of customers. Regular Sales $ 576,000 Variable costs 460,800 Contribution margin Fixed costs Income before taxes Income taxes (32% rate) Net income 115,200 36,000 79,200 25,344 $ 53,856 Simplified $ 540,000 378,000 162,000 66,000 96,000 30,720 $ 65,280 Required: 1.) Compute the company's contribution margin under both scenarios, if YTY decides to maintain its current yogurt store and if they decide to simplify according to the aforementioned scenario. Compute the contribution margin both in total dollars and per unit. 2.) Compute the company's contribution margin ratio under both scenarios. (Note: Do not round the CMR for accurate calculations in the following questions). 3.) Compute the break-even point in sales dollars under each scenario. How many cups of yogurt will need to be sold under each situation to break-even? 4.) Compute the operating leverage under each scenario. What does this figure mean? Why is it important to management? 2 ACCT 102 Alternative 1 Requirements (continued) 5.) If the company wishes that each scenario (regular and simplified) generate a net income (after-tax) of $170,000, what is the amount of sales that needs to be generated? How many cups will then need to be sold? Prepare a contribution margin statement for this step and verify that your after-tax net income in fact equals $170,000 for both the regular and simplified scenario. (Note: Round the target profit before tax to the nearest dollar and the units to the nearest whole unit.) 6.) Assume that the company expects yogurt sales to decline by 20% next year. There will be no change in yogurt price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two store scenarios (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings). 7.) Assume that the company expects sales to increase by 20% next year. There will be no change in yogurt price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two store scenarios (assume 32% tax rate, and that any loss before taxes yields a 32% tax savings). 8.) If sales greatly increase, which scenario would experience a greater increase in profit? What if sales declined -which scenario would experience a greater loss or reduction in income? Explain why. How does your calculation from (4) support your point? 9.) Thinking about yogurt sales, is there any day of the week or time of day when greater sales are expected? How do the store location and climate of the store location affect sales? Would these factors play into your decision to simplify the store or maintain current operations? Why or why not? Explain. Is there anything else the company can do to manage the decline in sales that come with certain days, times and weather? Is there any consideration of the health conscience customer in your decision? 10.) How do you recommend the company use the $30,000 advertising budget available under this scenario in order to achieve a maximum effect on their target audience? 11.) Compute the Profit Margin and Return on Assets for each scenario assuming an average total assets of $1,500,000. Industry averages are 12% and 5% respectively. Round your answer to two decimal places. 3