Question
The following is Silver 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
The following is Silver 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:
- 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 operating income increase?
- How many units would the company have to sell to attain target operating income of $225,000?
- What is the company's margin of safety in dollars?
- What is the company's degree of operating leverage?
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
1118334329, 978-1118334324
