Question
Pharoah sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The companys income statement from last month is
Pharoah sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The companys income statement from last month is as follows:
Total | Per Unit | |||
---|---|---|---|---|
Sales revenue | $756,000 | $54 | ||
Variable expenses | 264,600 | 18.90 | ||
Contribution margin | 491,400 | $35.10 | ||
Fixed expenses | 282,750 | |||
Operating income | $ 208,650 |
(a)
Correct answer icon
Your answer is correct.
What is Pharoahs contribution margin ratio? Its variable cost ratio? (Round ratios to 2 percentage places, e.g. 0.38 = 38%.)
Contribution margin ratio | enter contribution margin ratio in percentages rounded to 0 decimal places | % | |
---|---|---|---|
Variable cost ratio | enter variable cost ratio in percentages rounded to 0 decimal places | % |
eTextbook and Media
Attempts: 1 of 3 used
(b1)
Compute breakeven sales. (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.)
Breakeven sales | enter breakeven sales amount in dollars |
(b2)
What is Pharoahs margin of safety?
Margin of safety | enter margin of safety amount in dollars |
(c)
If Pharoahs sales were to increase by $100,000 with no change in fixed expenses, by how much would operating income increase? (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.)
Net Operating income will increase by | enter net operating income increase amount in dollars |
(d)
Pharoahs managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price. Market research indicates that the price increase will result in a 3% decrease in the number of learning systems Pharoah sells. What will be Pharoahs expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)
Operating income | enter operating income amount in dollars rounded to 0 decimal places |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started