Question
The following is a Corporation's contribution format income statement for last month: Sales $1,400,000 Less: variable expenses 900,000 Contribution margin 500,000 Less: fixed expenses 300,000
The following is a Corporation's contribution format income statement for last month:
Sales | $1,400,000 |
Less: variable expenses | 900,000 |
Contribution margin | 500,000 |
Less: fixed expenses | 300,000 |
Operating income | $200,000 |
The company has no beginning or ending inventories and produced and sold 10,000 units during the month. Required: a) What is the company's contribution margin ratio? b) What is the company's break-even in units? c) If sales increase by 100 units, by how much should operating income increase? d) How many units would the company have to sell to attain target operating income of $225,000? e) What is the company's margin of safety in dollars? f) What is the company's degree of operating leverage?
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