Suppose you have been asked to advise for the manufacturing firm, Kicker, which had sales and cost experience in thousands of dollars as depicted in this spreadsheet(Links to an external site.) for May of the current year and for May of the prior year.

In May of the prior year, Kicker started an intensive quality program designed to enable it to build original equipment manufacture (OEM) speaker systems for a major automobile company. The program was housed in research and development. At the beginning of the current year, Kicker's accounting department exercised tighter control over sales commissions, ensuring that no dubious (e.g., double) payments were made. The increased sales in the current year required additional warehouse space that Kicker rented in town.

(This assignment is derived from Problem 7-64 at the end of Chapter 7.)

Note: Round all ratios to four decimal places and round sales dollars computations to the nearest dollar.

Make a copy of the spreadsheet(Links to an external site.) and share it with editing capability with the instructor. Using the values identified at the top of the sheet for each year, complete the following.

• Calculate the contribution margin ratio for May of both years.
• Calculate the break-even point in sales dollars for both years.
• Calculate the margin of safety in sales dollars for both years.
• Analyze the differences shown by each of these calculations over both years. Explain your findings.