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The XYZ Manufacturing Company produces and sells specialized products. The company's contribution format income statement for the 2021 year is given below: Variable expenses.
The XYZ Manufacturing Company produces and sells specialized products. The company's contribution format income statement for the 2021 year is given below: Variable expenses. Sales Total $3,000,000 1,500,000 Contribution margin. 450,000 Net operating income.. Fixed expenses. Per Unit $300 $-- $-- Management is anxious to increase the company's profit and has asked for an analysis of a number of items. Required: a. The number of units sold b. Variable cost per unit c. Compute the company's CM ratio and variable expense ratio d. Break even units [10 marks] [10 marks] [15 marks] [10 marks] e. Refer to the original data. Assume that next year management wants the company to earn a profit of at least $1,250,000. How many unit sales will have to be sold to meet this target profit? [15 marks] f. Refer to the original data; The XYZ received an option from sales manager to improve its profit. The XYZ Manufacturing Company is to offer a reduction in the selling price per unit by 10%, combined with a $150,000 increase in advertising budget and increase this year's unit sales by 25%. If the sales manager were right, what would be this year's net operating income if his idea is implemented? [40 marks]
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