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Problem 08: A Company manufactures and sells a telephone answering machine. The company's contribution format income statement for the most recent year is given below:
Problem 08: A Company manufactures and sells a telephone answering machine. The company's contribution format income statement for the most recent year is given below: Taka Sales (2000 units (@ Tk. 60 per unit) 120000 Less, Variable Expenses @ Tk. 45 per unit 90000 Contribution Margin @ Tk. 15 per unit 30000 Less, Fixed Expenses 24000 Net Operating Income 6000 Required 1. Compute the company's Contribution Margin Ratio and Variable Expense Ratio. 2. Compute the company's break-even point in both units and amount using contribution margin method 3. Assume that sales increase by Tk. 40000 next year. If cost behavior patterns remain unchanged by how much will the company's net operating income increase? 4. If the company's target profit is Tk. 9000, how many units will have to be sold and what will be targeted sales in amount. 5. Refer to the original data; compute the company's margin of safety in both amount and percentage form. 6. (a) Compute the company's degree of operating leverage at the present level of sales (b) If sales increase by 10% what percentage would you expect net operating income to increase
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