Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Parson Company produces a single product. The projected income statement for the upcoming year, based on sales of 192,000 units, is as follows: Sales revenue

Parson Company produces a single product. The projected income statement for the upcoming year, based on sales of 192,000 units, is as follows: Sales revenue $3,550,000 Less: Variable costs $1,850,000 Contribution margin $1,700,000 Less: Fixed costs $950,000 Operating income $750,000 Required: Compute the unit contribution margin and the units that must be sold to break even. Suppose that 45,000 units are sold above the breakeven point. What is the profit? Compute the contribution margin ratio and the breakeven point in dollars. Suppose that revenues are $365,000 greater than expected. What would the total profit be? Compute the margin of safety in sales revenue. Compute the operating leverage. Compute the new profit level if sales are 18% higher than expected. Assume the income tax rate is 35%. How many units must be sold to earn an after-tax profit of $295,000?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Human Resource Management

Authors: Robert L. Mathis, John H. Jackson

13th Edition

053845315X, 978-0538453158

More Books

Students also viewed these Accounting questions

Question

How do members envision the ideal team?

Answered: 1 week ago