Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below:

Selling price per unit$27Variable expense per unit$18Fixed expense per month$7,830Unit sales per month1,020

Required:

1. What is the company's margin of safety?(Do not round intermediate calculations.)

2. What is the company's margin of safety as a percentage of its sales?(Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34).)

Q2) Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:

AmountPercent of SalesSales$138,000100%Variable expenses55,20040%Contribution margin82,80060%Fixed expenses18,000Net operating income$64,800

Required:

1. What is the company's degree of operating leverage?

2. Using the degree of operating leverage, estimate the impact on net operating income of a 14% increase in unit sales.

3. Construct a new contribution format income statement for the company assuming a 14% increase in unit sales.

Q3) Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $140 per unit. Variable expenses are $98 per stove, and fixed expenses associated with the stove total $180,600 per month.

Required:

1. What is the break-even point in unit sales and in dollar sales?

2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.)

3. At present, the company is selling 10,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes.

4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $74,000 per month?

Q4) Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $980. Selected data for the company's operations last year follow:

Units in beginning inventory0Units produced14,000Units sold11,000Units in ending inventory3,000Variable costs per unit:Direct materials$280Direct labor$470Variable manufacturing overhead$48Variable selling and administrative$24Fixed costs:Fixed manufacturing overhead$870,000Fixed selling and administrative$530,000

Required:

1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan.(Round your intermediate calculations and final answer to the nearest whole dollar amount.)

2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan.

Q5) Required information

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Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data:

Year 1Year 2Year 3InventoriesBeginning (units)200160190Ending (units)160190230Variable costing net operating income$300,000$269,000$260,000

The company's fixed manufacturing overhead per unit was constant at $560 for all three years.

rev: 03_09_2019_QC_CS-162392

Required:

1. Calculate each year's absorption costing net operating income.(Enter any losses or deductions as a negative value.)

2. Assume in Year 4 that the company's variable costing net operating income was $240,000 and its absorption costing net operating income was $280,000.

a. Did inventories increase or decrease during Year 4?

multiple choice

• Increase
• Decrease

b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?