Question
The following is AAA's Corporation's contribution format income statement for last month: CSV Income Statement $ Sales $1,200,000 Less variable expenses 800,000 Contribution margin 400,000
The following is AAA's Corporation's contribution format income statement for last month:
| CSV Income Statement | $ |
| Sales | $1,200,000 |
| Less variable expenses | 800,000 |
| Contribution margin | 400,000 |
| Less fixed expenses | 300,000 |
| Net income | $100,000 |
The company has no beginning or ending inventories and produced and sold 20,000 units during the month.
You are required to calculate the following for the company management.
- What is the company's contribution margin ratio?
- What is the company's break-even in units?
- If sales increase by 100 units, by how much should net income increase?
- How many units would the company have to sell to attain target profits of $125,000?
- What is the company's margin of safety in dollars?
- What is the company's degree of operating leverage?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
4th Edition
1119607515, 978-1119607519
