Please answer the requirement 5 and show all the calculations
Requirements 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. 2. Compute the dollar amount of monthly sales that the company needs in order to earn $308,000 in operating income (round the contribution margin ratio to two decimal places). 3. Prepare the company's contribution margin income statement for June for sales of 470,000 cartons of calendars. 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? 5. By what percentage will operating income change if July's sales volume is 11% higher? Prove your answer. Print Done Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,095,000 each month plus variable expenses of $6.50 per carton of calendars. Of the variable expense, 73% is cost of goods sold, while the remaining 27% relates to variable operating expenses. The company sells each carton of calendars for $16.50. Read the requirements Requirement 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Operating Sales revenue Variable expenses Fixed expenses income Using the basic income statement equation you determined above solve for the number of cartons to break even. The breakeven sales is 109,500 cartons. Requirement 2. Compute the dollar amount of monthly sales Team Spirit Calendars needs in order to earn $308,000 in operating income. Begin by determining the formula. Target sales in Fixed expenses + Target operating income / Contribution margin ratio = dollars (Round the contribution margin ratio to two decimal places.) The monthly sales needed to earn $308,000 in operating income is $ 2,300,000 Requirement 3. Prepare the company's contribution margin income statement for June for sales of 470,000 cartons of calendars. Team Spirit Contribution Margin Income Statement Month Ended June 30 Sales revenue $ 7,755,000 Variable expenses: Cost of goods sold $ 2.230,150 Operating expenses 824,850 3,055,000 Contribution margin 4,700,000 Fixed expenses 1,095,000 Operating income $ 3,605,000 Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? Begin by determining the formula. Sales revenue Sales revenue at breakeven = Margin of safety (in dollars) The margin of safety is $ 5,948,250 What is the operating leverage factor at this level of sales? Begin by determining the formula. Contribution margin Operating income = Operating leverage factor (Round the operating leverage factor to three decimal places.) The operating leverage factor is 1.304 Requirement 5. By what percentage will operating income change if July's sales volume is 11% higher? Prove your answer. (Round the percentage to two decimal places.) If volume increases 11%, then operating income will increase 14.34 %. Prove your answer. (Round the percentage to two decimal places.) Original volume (cartons) 7,755,000 Add: Increase in volume New volume cartons) Multiplied by: Unit contribution margin New total contribution margin Less: Fixed expenses New operating income vs. Operating income before change in volume Increase in operating income Percentage change %
