Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Sales revenue Variable expenses Fixed expenses Operating income Using the basic income statement equation you determined above solve for the number of cartons to break even. The breakeven sales is 75000 cartons. Requirement 2. Compute the dollar amount of monthly sales Spirit Rock Calendars needs in order to earn $338,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income Contribution margin ratio = Target sales in dollars (Round the contribution margin ratio to two decimal places.) 1001076 Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Requirement 2. Compute the dollar amount of monthly sales Spirit Rock Calendars needs in order to earn $338,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income Contribution margin ratio Target sales in dollars (Round the contribution margin ratio to two decimal places.) The monthly sales needed to earn $338,000 in operating income is 1901976 Requirement 3. Prepare the company's contribution margin income statement for June for sales of 450,000 cartons of calendars. Spirit Rock Contribution Margin Income Statement Month Ended June 30 Sales revenue Cost of anods sold Choose from any list or enter any number in the input fields and then continue to the next question. Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Requirement 3. Prepare the company's contribution margin income statement for June for sales of 450,000 cartons of calendars. Spirit Rock Contribution Margin Income Statement Month Ended June 30 Sales revenue Cost of goods sold Contribution margin Operating expenses Contribution margin Fixed expenses Operating income Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? Choose from any list or enter any number in the input fields and then continue to the next question. Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? Begin by determining the formula. Sales revenue Sales revenue at breakeven Margin of safety (in dollars) The margin of safety is What is the operating leverage factor at this level of sales? Begin by determining the formula. Contribution margin . Operating income = Operating leverage factor (Round the operating leverage factor to three decimal places.) The operating leverage factor is 1.2 Requirement 5. By what percentage will operating income change if July's sales volume is 13% higher? Prove your answer. (Round the percentage to two decimal places.) Choose from any list or enter any number in the input fields and then continue to the next question. Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Requirement 5. By what percentage will operating income change if July's sales volume is 13% higher? Prove your answer. (Round the percentage to two decimal places.) If volume increases 13%, then operating income will increase 15.6 %. Prove your answer. (Round the percentage to two decimal places.) Original volume (cartons) 450000 Add: Increase in volume 58500 New volume (cartons) 508500 15 Multiplied by: Unit contribution margin New total contribution margin 7627500 Less: Fixed expenses 1125000 New operating income 6502500 5625000 vs. Operating income before change in volume 0776nnl Choose from any list or enter any number in the input fields and then continue to the next question. Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 68% is cost of goods sold, while the remaining 32% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. Prove your answer. (Round the percentage to two decimal places.) Original volume (cartons) 450000 Add: Increase in volume 58500 New volume (cartons) 508500 15 Multiplied by: Unit contribution margin New total contribution margin 7627500 Less: Fixed expenses 1125000 New operating income 6502500 5625000 vs. Operating income before change in volume 877500 Increase in operating income 15.6 Percentage change %
