nces Mailings Review View Help E 2 " Aa A E DA . . 1 Normal I No Spac... Heading 1 I leading 2 Title Subtitle Subtle Em... Paragraph Styles 2. Rhiner Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1.500 units): Sales $20,000 Variable expenses 12,000 Contribution margin 8,000 Fixed expenses 6,000 Net operating income $ 2,000 Required: (Answer each question independently and always refer to the original data unless instructed otherwise.) (Show all work/calculations. No credit will be given without showing your work and/or calculations.) a. What is the contribution margin per unit? b. What is the contribution margin ratio? c. What is the variable expense ratio? d. If sales increase to 1,001 units, what would be the increase in net operating income? e. If sales decline to 900 units, what would be the net operating income? f. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? g. If the variable cost per unit increases by $1, spending on advertising increases by $1,500, and unit sales increase by 250 units, what would be the net operating income? h. What is the break-even point in unit sales? i. What is the break-even point in dollar sales? j. How many units must be sold to achieve a target profit of $5,000? k. What is the margin of safety in dollars? What is the margin of safety percentage? 1 What is the degree of operating leverage? Font 2 Paragraph Styles m. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? n. Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $6,000 and the total fixed expenses are $12,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? o. Using the degree of operating leverage that you computed in the previous question, what is the estimated percent increase in net operating income of a 5% increase in sales? A template (FA20 Comprehensive Problem 1 Template) in Excel is provided to assist you in completing the assignment. The template provides two worksheets, one for chapter 17 with areas to include journal entries, t-accounts, schedules and an income statement and one for chapter 20 with areas to include a contribution format income statement and formulas for all topics and calculations discussed in the chapter. Using the template is optional and not required to complete the problem although it may help you in doing so. You may modify the template as needed. You may submit the template or not as support for your completed problem but be sure you have labeled all work appropriately. You will be working in the YELLOW areas of the template. FO O Senich AutoSave CT H. FA20 Comprehensive Problem 1 Templates - Excel Insert File Review Formulas Home Page Layout Data View Help LN Gencral Anal 12 Wrap Text ' ' X cat Copy ~ Fomat Painter Paste $ % -28 BIU 13. A.AE Merge & Center Conditional Format as Formatting Table Style Styles Number 5 Font Alignment Clipboard 134 X G A C E D 1 ON % Per Unit Total Costs 0 #units Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Operating Income 7 8 10 11 12 13 14 Contribution margin per unit Sales price Variable costs 15 16 17 18 19 Contribution margin ratio Contribution margin Net sales revenue 20 21 22 23 Breakeven sales in units Fixed costs + Target profit Unit Contribution Marain 24 Chapter 17 Chapter 20 G General ab Wiap Teart Arial 12 X Cut Th Copy Format Painter A A HOA- Pasta BIU Merge & Center $ % 8- Conditional Formatas Formatting Table Styles Number 1 Fent Nigament Clobeard 134 X K G D E 2A 23 Breakeven sales in units Fixed costs + Target profit Unit Contribution Margin 24 25 26 27 / Required sales in dollars Fixed costs + Target profit Contribution Margin Ratio 28 29 30 31 Targeted sales in units Fixed costs + Target profit Unit Contribution Margin 32 34 35 36 / Targeted sales in dollars Fixed costs + Target profit Contribution Margin Ratio 37 30 39 40 41 42 43 Breakeven Marain of Expected sales cantor 12 Chapter 20 AuloSave comprehensive problem i Templates Exce File Home Insert Page Layout Formulas Data Review View Help X Cut Anal 25 Wrap Text General la Copy Paste Format Painter 12 AA 3.A 40.00 BIU Merge & Center $ % Conditional FC Formatting Clipboard Font Alignment Number SIL 134 ! fr A B D E F C H 43 Expected sales Breakeven sales Margin of safety in units 44 45 46 17 48 Margin of safety in units Sales price per = unit Margin of safety in dollars 49 50 51 Degree of operating leverage Contribution margin Operating income 53 54 55 56 57 58 59 30 31 32 33 51 55 Percent change in operating income Operating leverage Percent change in sales revenue 36 Chantar 20 Arial - - A A 19 Wrap Text Paste la Copy - Format Painter B 1U 21. A.A. = Menge Center Gencral $ -% 683 Clipboard Conditional Format as Cell Formattinglable Styles Styles Fort 5 Aliment Number 5 134 f 4 A 63 D E G K 61 65 Percent change in operating income Operating leverage Percent change in sales revenue x 60 67 88 09 70 Estimated operating income Operating income (1 + Percent change in operating income) 1 2 3 4 -> 6