Question
Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $ 1 comma 095 comma 000 each month plus variable expenses
Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $ 1 comma 095 comma 000 each month plus variable expenses of $ 4.00 per carton of calendars. Of the variable expense, 70% is cost of goods sold, while the remaining 30% relates to variable operating expenses. The company sells each carton of calendars for $ 12.00.
.
Compute the number of cartons of calendars that
Team SpiritTeam Spirit
Calendars must sell each month to break even.
2.
Compute the dollar amount of monthly sales that the company needs in order to earn
$ 312 comma 000$312,000
in operating income (round the contribution margin ratio to two decimal places).
3.
Prepare the company's contribution margin income statement for June for sales of
490 comma 000490,000
cartons of calendars.
4.
What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales?
5.
By what percentage will operating income change if July's sales volume is
1313%
higher? Prove your answer.
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