Mansmark Company plans to sell 5,000 helmets at $75.00 each in the coming year. Product costs include:

Direct materials per helmet $ 30.00

Direct labor per helmet 8.00

Variable factory overhead per helmet 4.00

Total fixed factory overhead 20,000

Variable selling expense is a commission of $3 per helmet; fixed selling and administrative expense totals $29,500.

REQUIRED:

1. Calculate the total variable cost per unit
2. Calculate the variable cost ratio
3. Calculate the contribution margin per helmet
4. Calculate the contribution margin ratio
5. Calculate the total fixed expense for the year
6. Prepare a contribution margin income statement for Mansmark Company for the coming year.
7. Calculate the break-even number in helmet
8. Calculate the break-even in dollar
9. Assuming the companys desired operating income of $81,900, calculate for the number of helmet it will manufacture and how much would be the sales in dollar?

B.

Supposed Mansmark company now sells both bicycle and motorcycle helmets. The bicycle helmets are price at $75.00 and have a variable cost of $45.00 each. The motorcycle helmets are priced at $220.00 and have a variable costs of $140 each. Total fixed cost for the company as a whole equals $58,900 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Mansmark expects to sell 5,000 bicycle helmets and 2,000 motorcycle helmets.

REQUIRED:

1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.
2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.
3. Calculate the break-even point in sales pesos for Mansmark. (Note: Round the contribution margin ratio to four (4) decimal places and sales to the nearest dollar).

C. Refer to the same data in letter A for the next requirements:

1. Calculate the margin of safety in terms of the number of units
2. Calculate the margin of safety in terms of sales revenues.

D. Refer to the same data in letter A for the next requirements:

Assume further that operating income at 5,000 unit sold is $100,500.

1. Calculate the degree of operating leverage.
2. Assume further that the company expects to increase sales by 10% next year, calculate the percent change in operating income expected.