The following is Alsatia Corporation's contribution format income statement for last month: Sales $1,400,000 Variable expenses $900,000 Contribution margin $500,000 Fixed expenses $300,000 Net operating
The following is Alsatia Corporation's contribution format income statement for last month:
| Sales | $1,400,000 |
|---|---|
| Variable expenses | $900,000 |
| Contribution margin | $500,000 |
| Fixed expenses | $300,000 |
| Net operating income | $200,000 |
The company has no beginning or ending inventories and produced and sold 10,000 units during the month.
a. What is the companys contribution margin ratio?
b. What is the comapny's break even in units?
c. If sales increase by 100 units, by how much should net operating income increase?
d. How many units would the company have to sell to attain target profits of $225,000?
e.What is the company's margin of safety in dollars?
f. What is the company's degree of operating leverage?
Step by Step Solution
3.37 Rating (147 Votes )
There are 3 Steps involved in it
Step: 1
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
Authors: Ray Garrison, Eric Noreen, Peter Brewer
16th edition
1259307417, 978-1260153132, 1260153134, 978-1259307416
