SHOW CALCULATIONS

Unitech Inc. Gross Margin Income Statement For the Most Recent Quarter $225,000 128,250 96,750 Sales Cost of goods sold Gross margin Selling and adminstrative expenses: Selling expenses Administrative expenses Operating income 19,800 30,400 50,200 $46,550 The candles sell, on average, for $95 each. The company's variable selling expenses are $2.00 per candle sold. The remaining selling expenses are fixed. Variable administrative expenses are 2% of sales. 1. What are the total variable costs (rounded to the nearest dollar)? (3 marks) Number 2. What is the total contribution margin (rounded to the nearest dollar)? (1 mark) Number 3. What is the contribution margin per unit (rounded to nearest cent)? (1 mark) Number 4. What are the total fixed costs (rounded to the nearest dollar)? (2 marks) Number 5. How many units must be sold to break-even (rounded to nearest unit)? (1 mark) Number 6. What is the break-even point in total sales dollars (rounded to nearest dollar)? (1 mark) Number 7. Calculate margin of safety (in dollars). (1 mark) Number 8. Calculate degree of operating leverage (rounded to two decimal points). (1 mark) Number 9. If the company sells 1,900 more units in the next quarter than it did in the latest quarter, and fixed costs remain the same, how much will operating income increase by (rounded to the nearest dollar)? (1 mark) Number 10. Management believes that if they increase advertising expenses by $28,000, this will increase unit sales by 1,000. What is the increase or decrease in operating profit if they decide to increase advertising expenses (rounded to the nearest dollar)? (2 marks) Number 11. Should they increase advertising expenses? (1 mark) O Yes, Unitech Inc. should increase advertising expenses. No, Unitech Inc. should not increase advertising expenses. 12. How many units must the store sell to earn a $100,000 target operating income for a quarter (rounded to the nearest dollar)? (1 mark) Number