Moran Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs $217,000; and fixed costs $70,000. In the upcoming months, Management is considering the following independent scenarios to increase operating income: (independent means scenario 1 does not impact scenario 2, does not impact scenario 3, etc.)

Scenario 1. Increase the selling price by 10% with no change in total variable costs.

Scenario 2. Reduce variable costs to 65% of sales.

Scenario 3. Reduce fixed costs by $10,000.

Hint: Be clear on dates. If you decide to use the SALMON sheet, use the information in the scenario to fill out the SALMON sheet and then fill in the answers in the quiz.

Use the information provided to answer the following questions:

Actual August results :

a) In August, what was Moran's selling price per unit?

b) Moran's variable cost per unit?

c) Moran's contribution margin per unit?

d) What was Moran's variable cost ratio in percentage terms for August?

e) What was Moran's contribution margin ratio in percentage terms for August?

f) What was Moran's net income before taxes in August?

g) Based on Moran's operating results for the month of August, what was the company's degree of operating leverage? Round to two decimal places.

Scenario 1 - Selling Price Increases by 10% h) Under Alternative 1, what is Moran's selling price per unit?

i) Under Alternative 1, what is Moran's contribution margin per unit?

Note the relationship between the change in price and the change in contribution margin per unit. j) Under Alternative 1, what is Moran's net income before tax?

k) Is Moran's degree of operating leverage higher or lower under Alternative 1 than it was for the month of August?

Scenario 2 - Variable Costs are Reduced to 65% of Sales (The selling price is the original August price and not the selling price in alternative 1)

l) Under Alternative 2, what is Moran's contribution margin ratio in percentage terms?

m) Under Alternative 2, what is Moran's total variable cost?

n) Under Alternative 2, what is Moran's net income before tax?

o) Is Moran's degree of operating leverage higher or lower under Alternative 2 than it was for the month of August?

Scenario 3 - Reduce fixed costs by $10,000

p) Under Alternative 3, what is Moran's net income before tax?

q) Is Moran's degree of operating leverage higher or lower under Alternative 3 than it was for the month of August?