Question #1

Question #2

Question #3

Question #4

Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Amount Sales Sales $ 130,000 100% 52,000 40% Variable expenses Contribution margin 78,000 60% Fixed expenses 20,000 Net operating income. $ 58,000 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 27% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 27% increase in sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage 1.34 Using the degree of operating leverage, estimate the impact on net operating income of a 27% increase in sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (i.e.1234 should be entered as 12.34).) Net operating income increases by % Construct a new contribution format income statement for the company assuming a 27% increase in sales. Engberg Company Contribution Income Statement Amount Percent of Sales % % 0% 0 0 Lindon Company is the exclusive distributor for an automotive product that sells for $26.00 per unit and has a CM ratio of 30%. The company's fixed expenses are $132,600 per year. The company plans to sell 18,800 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $54,600 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2.60 per unit. What is the company's new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $54,600? 1 Variable expense per unit 2. Break-even point in units Break-even point in dollar sales 3. Unit sales needed to attain target profit Dollar sales needed to attain target profit 4. New break-even point in unit sales New break-even point in dollar sales Dollar sales needed to attain target profit Magic Realm, Inc., has developed a new fantasy board game. The company sold 54,600 games last year at a selling price of $62 per game. Fixed expenses associated with the game total $1,001,000 per year, and variable expenses are $42 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 68,250 games next year (an increase of 13,650 games, or 25%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Prepare a contribution format income statement for the game last year. Magic Realm, Inc., Contribution Income Statement Total Per Unit $ 0 $ 0 Compute the degree of operating leverage. Degree of operating leverage Management is confident that the company can sell 68,250 games next year (an increase of 13,650 games, or 25%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Show less a. Net operating income increases by % b. Total expected net operating income The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Electrical Costs Occupancy-Days 3,030 $9,044 January February 3,080 $9,234 March 3,980 $11,913 April 1,630 $ 6,194 May 1,270 $4,826 June 2,110 $ 8,018 July 650 $ 2,470 3,690 $11,552 $ 7,448 1,960 August September October November 4,410 $12,998 1,600 $ 6,080 December 2,230 $ 8,474 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.) Variable cost of electricity per occupancy-day per month Fixed cost of electricity 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Systematic factors like guests, switching off fans and lights. Number of days present in a month. Income taxes paid on hotel income. Seasonal factors like winter or summer. Fixed salary paid to hotel receptionist