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Q5.(6 Marks) Dersyn Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to
Q5.(6 Marks) Dersyn Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: Standard Selling Price per Unit $150 Variable Production Costs $120 Variable Selling Expense per Unit $16 Expected Monthly Sales in Units 600 Total Monthly Fixed Cost (Common to Both) Deluxe $165 $126 $13 1.200 I $15.000 Calculate the break-even in sales dollars for the expected sales mix. Show all your calculations (6 Marks) 3 . 1 . 4.. ..5 Q1.(12 Marks) The following is Jordon Manufacturing's contribution format income statement for last month: 6 Sales Less: Variable Expenses Contribution Margin Less: Fixed Expenses Operating Income $1,400,000 $900,000 $500,000 $300,000 $200,000 The company has no beginning or ending inventories and produced and sold 10,000 units during the month Required: a) What is the company's contribution margin ratio? (2 marks) b) What is the company's break-even in units? (2 marks) c) If sales increase by 100 units, by how much should operating income increase? (4 marks) d) How many units would the company have to sell to attain target operating income of $225,000? (2 marks) e) What is the company's margin of safety in dollars? (2 marks) f) What is the company's degree of operating leverage? (2 marks)
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