Question
The Janson Company operating results for the previous year were as follows: Required: Sales (5,000 units) $82,500 Manufacturing costs: Variable 42,000 Fixed 20,000 Selling
The Janson Company operating results for the previous year were as follows: Required: Sales (5,000 units) $82,500 Manufacturing costs: Variable 42,000 Fixed 20,000 Selling and Administrative costs: Variable 3,000 Fixed 4,000 1. Calculate both the contribution margin per unit and contribution margin ratio. (4 marks) 2. Calculate the breakeven point in both unit sales and sales dollars (round to whole number) (4 marks) 3. a. Calculate the margin of safety in units (2 marks) b. What does your answer to part 3.a. above indicate to management? (1 mark) 4. Estimate the change in operating income if the company increases total sales by $15,000 (do not create an income statement). (2 marks)
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