Mcknight Company sells flags with feam logos. McKnight has fored costs of $672,000 per year plus variable costs of $8,40 per flag. Each flag 5ells for $1400. Read the requirements Requirements Requirement 1. Use ti First, select the focmale 1. Use tho equh apon apch to compute the number of fiags Mckright must seg each year to break even. 2. Use the contrbulion margin rato approach to compute the dolar sales Mckight needs to etarn 55,600 in operating income for the yoar (Round the contribution margin ratio to two decimal places.) 3. Prepare McKright's contnbution margin income statement for the year ended December 31, for sales of 114,000 fags (Round yout finat answers up to the nact whole number ) 4. The company is considenng an expansion that will increase foced costs by 30% and variable costs by $140 per flag compute the new breakeven point in units and in dollars Should Mcknght undertake the expansion? Give yout teasoning (Round your final answers up to the next whole number) Requirement J. Prepa Do flags: (Round your fintal answers up to the ne Requirement 1. Use the equation approach to compute the number of flags Mcknight must sell each year to break even First, select the tormula to compute the required sales in units to break even. Rearrange the fombla you determined above and compute the required number of fags to break even The number of llags MeKnight must sell each year to break oven is Requirement 2. Use the contribution margin ratio approach to compute the dollar sales Mcknight needs to earn 55,600 in operating income for the year (Round the Begin by showing the formula and then entering the amounts to calculate the required sales dollars to earn $5,600 in operating income (Round the required sales in of Requirement 3, Prepare Mcknighrs contribution margin income statement for the year ended December 31, for sales of 114,000 fags. (Round your final answers up to Requirement 4. The company is considering an expansion that wil incease foed costs by 30% and vanable costs by 51.40 per fiag. Compute the new breakeven pont in whole number) (Use the equanon approach ) Beon by setacting the formula to compute the requed saten in units to break even under the expansion plan Rearrange the formula you determined above and compute the requied number of thags to broak even unger the expansion plan Under the expansion plan, the breakeven point in unts would be Requirement 4 . The company is considering an expansion that will increase fixed costs by 30% and variable costs by $1.40 per flag. Comput whole number) (Use the equation approach.) Begin by selecting the formula to compute the required sales in units to break even under the expansion plan. Rearrange the formula you determined above and compute the required number of flags to break even under the expansion plan. Under the expansion pian, the breakeven point in units would be flags. Under the expansion plan, the breakeven point in dollars would be Should Mcknight undertake the expansion? Give your reasoning Mckright should only undertake the expansion if expected profits from the expansion the expected costs
