Lilah and Juliets Book Company (LJBC) sells childrens books for $10 per book.Variable costs are $6 per book.Fixed costs are $300,000 per year.

1. How many books must LJBC sell in 2013 to earn a target profit of $ 100,000?

10,000

25,000

16,667

75,000

100,000

2. Assume LJBC in fact makes their 2013 target profit. What is LJBCs margin of safety in dollars?

a. $100,000

b. $250,000

c. $400,000

d. $300,000

e. $750,000

3. Dannys Manufacturing Company (DMC) sells a babys high chair for $50. DMC has a contribution margin ratio of 40% and annual fixed expenses of $250,000. In 2012, DMC sold 10,000 high chairs. DMC was disappointed in its results and is contemplating the following actions:

Lower the selling price of its product by 10%.

Reduce the fixed salaries of salesmen by $50,000 and give salesmen a commission of $2.00 per high chair sold.

Change the manufacturing process to reduce variable costs by $8.00 per high chair produced while increasing fixed expenses by $150,000. If DMC implements this plan, they will increase sales volume by 20%. What is the impact to DMCs profit if it implements the plan described above?

Reduce profits by $48,000.

Increase profits by $40,000.

Increase profits by $52,000.

Reduce profits by $100,000.

Increase profits by $12,000.

Could you please be kind enough and show me the solutions and answers in detail?

Thank you so much and have a good one! :D