Jamina Corporation sells a product for $6 per unit. Fixed expenses total $37,500 per month and variable expenses are $2 per unit. How many units must be sold each month for Jamina to realize a profit before income taxes of 15% of sales?

 

2. Abby Corporation sells 3 products. Sales and Contribution Margin Ratio for the 3 products follow:

	Product
	A	B	C
Sales	$20,000	$40,000	100,000
Contribution Margin Ratio	45%	40%	15%

Given these information, how much is the Contribution Margin Ratio for the company as a whole?

 

3. Smile Company invested $31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = $1,562.50; Fixed selling and administrative costs = $625.00; Fixed manufacturing costs = $312.50. To accomplish the company objective, how much must be the price of one cabinet?

 

4. Vicks Inc. produced and sold 240,000 bags of organic fertilizers as follows:
Sales Revenue - $1,896,000
Manufacturing Margin - 1,092,000
Contribution Margin - 912,000
Fixed Costs:
Manufacturing - $520,000
Selling and Administrative - 270,000

a. How much is the company's margin of safety in units?

b. What is he company's degree of operating leverage?