Question
The following is Arkadia Corporation's contribution format income statement for last month: SALES 1,200,000 VARIABLE EXPENSE 800,000 CONTRIBUTION MARGIN 400,000 FIXED EXPENSES 300,000 NET OPERATING
The following is Arkadia Corporation's contribution format income statement for last month:
| SALES | 1,200,000 |
| VARIABLE EXPENSE | 800,000 |
| CONTRIBUTION MARGIN | 400,000 |
| FIXED EXPENSES | 300,000 |
| NET OPERATING INCOME | 100,000 |
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 net operating income increase?
d. How many units would the company have to sell to attain a target profit of $125,000?
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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IT Auditing And Sarbanes Oxley Compliance Key Strategies For Business Improvement
Authors: Dimitris N. Chorafas
1st Edition
036738650X, 978-0367386504
