Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following is Alsatia Corporation's contribution format income statement for last month: Sales $ 1 , 4 0 0 , 0 0 0 Less: variable

The following is Alsatia Corporation's contribution format income statement for last month:
Sales $1,400,000
Less: variable expenses 800,000
Contribution margin 600,000
Less: fixed expenses 400,000
Operating income $200,000
The company has no beginning or ending inventories and produced and sold 20,000 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Accounting for Governmental and Not-for-Profit Organizations

Authors: Paul A. Copley

10th Edition

007352705X, 978-0073527055

More Books

Students also viewed these Accounting questions