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I need help figuring out this problem. Please show your work where you can, I greatly appreciate it. Thank you! Voltar Company manufactures and sells
I need help figuring out this problem. Please show your work where you can, I greatly appreciate it. Thank you!
Voltar Company manufactures and sells a specialized cordless telephone for high electromagnetic radiation environments. The company's contribution format income statement for the most recent year is given below: Total Per Unit $60 Sales (20,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 45 Percent of Sales 100% ? % ? % $1,200,000 900,000 300,000 240,000 $ 60,000 $15 Management is anxious to increase the company's profit and has asked for an analysis of a number of items. Required: 1. Compute the company's CM ratio and variable expense ratio. 2. Compute the company's break-even point in both unit sales and dollar sales. 3. Assume that sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Show your calculation. 4. Refer to the original data. Assume that next year management wants the company to earn a profit of at least $90,000. Compute the answer in both unit sales and dollar sales. 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage form. 6. a. Compute the company's degree of operating leverage at the present level of sales. b. If the company's sales increase by 8% next year, by what percentage would you expect net operating income to increaseStep by Step Solution
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