Question
The following is Addison Corporation's contribution format income statement for last month: Sales $1,000,000 Less: Variable Expenses $ 700,000 Contribution Margin $ 300,000 Less: Fixed
The following is Addison Corporation's contribution format income statement for last month:
| Sales | $1,000,000 |
| Less: Variable Expenses | $ 700,000 |
| Contribution Margin | $ 300,000 |
| Less: Fixed Expenses | $ 180,000 |
| Net Income | $ 120,000 |
The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
| A. | What is the company's contribution margin ratio? |
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| B. | What is the company's break-even in units? |
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| C. | If sales increase by 100 units, by how much should net income increase? |
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| D. | How many units would the company have to sell to attain target profits of $150,000? |
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| E. | What is the company's margin of safety in dollars? |
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| F. | What is the company's degree of operating leverage? |
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