Question
Question 1 (10 points) Spencer Company's most recent monthly contribution format income statement is given below: Sales $160,000 Less: variable expenses 100.000 Contribution margin
Question 1 (10 points) Spencer Company's most recent monthly contribution format income statement is given below: Sales $160,000 Less: variable expenses 100.000 Contribution margin 60,000 Less: fixed expenses 63.000 Operating income (3,000) The company sells its only product for $10 per unit. There were no beginning or ending inventories. Required: a) What is the company's contribution margin ratio? b) What are total sales in dollars at the break-even point? c) What are total variable expenses at the break-even point? d) If unit sales were increased by 10% and fixed expenses were reduced by $2,000, what would be the company's expected operating income? (Prepare a new income statement.)
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