question e20-8

Determine the following, showing as a part of your answer the formula that you used your computation. For example, the formula used to determine the contribution margin ratio (part a) is Contribution Margin Ratio = Unit Sales Price - Variable Costs per Unit/Unit Sales Price Contribution margin ratio. Sales volume (in dollars) required to break even. Sales volume (in dollars) required to earn an annual operating income of $450,000. The margin of safety sales volume if annual sales total 40,000 units. Operating income if annual sales total 40,000 units. Arrow Products typically earns a contribution margin ratio of 25 percent and has current costs of $80,000. Arrow's general manager is considering spending an additional $20,000 to do one of the following: Start a new ad campaign that is expected to increase sales revenue by 5 percent. License a new computerized ordering system that is expected to increase Arrow's contribution margin ratio to 30 percent. Sales revenue for the coming year was initially forecast to equal $1, 200,000 (that is, without implementing either of the above options). For each option, how much will projected operating income increase or decrease relative initial predictions? By what percentage would sales revenue need to increase to make the ad campaign as attractive as the ordering system? Easy Writer manufactures an erasable ballpoint pen, which sells for $1.75 per unit. Management recently finished analyzing the results of the company's operations for the current month. At a break-even point of 40,000 units, the company's total variable costs are $50,000 and its total fixed costs amount to $20,000. Calculate the contribution margin per unit. Calculate the company's margin of safety if monthly sales total 45.000 units. Estimate the company's monthly operating loss if it sells only 38,000 units. Compute the total cost per un at a production level of (1) 40,000 pens per month and (2) 50,000 pens per month. Explain the reason for the change in unit costs. The following information relates to the only product sold by Harper company: Sales price per unit $ 24 Variable cost per unit 18 Fixed costs per year 240,000 Compute the contribution margin ratio and the dollar sales volume required to break even. Assuming that the company sells 75,000 units during the current year, compute the margin of safety sales volume (dollars)