SunlandTot sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The companys income statement from last month is as follows:

		Total		Per Unit
Sales revenue		$745,200		$54
Variable expenses		335,340		24.30
Contribution margin		409,860		$29.70
Fixed expenses		247,500
Operating income		$ 162,360

(a)

Correct answer iconYour answer is correct.

What is SunlandTots contribution margin ratio? Its variable cost ratio? (Round ratios to 2 percentage places, e.g. 0.38 = 38%.)

Contribution margin ratio		Enter percentages rounded to 2 decimal placesEnter percentages rounded to 2 decimal placesEnter percentages rounded to 2 decimal places	%
Variable cost ratio		Enter percentages rounded to 2 decimal placesEnter percentages rounded to 2 decimal placesEnter percentages rounded to 2 decimal places	%

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Attempts: 1 of 3 used

(b1)

Compute breakeven sales. (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.)

Breakeven sales

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(b2)

What is SunlandTots margin of safety?

Margin of safety

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(c)

If SunlandTots sales were to increase by $100,000 with no change in fixed expenses, by how much would operating income increase? (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.) Please show work

Net Operating income will increase by

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(d)

SunlandTots managers have determined that variable costs per unit will increase by 19% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price. Market research indicates that the price increase will result in a 3% decrease in the number of learning systems SunlandTot sells. What will be SunlandTots expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)

Operating income

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