Question
Topper Company produces a variety of products. One division makes gas grills for outdoor cooking. The division's projected income statement for the coming year
Topper Company produces a variety of products. One division makes gas grills for outdoor cooking. The division's projected income statement for the coming year is as follows: Required: Sales (120,000 units) Less: Variable expenses Contribution margin Less: Fixed expenses_ Operating Income $7,500,000 3.450.000 $4,050,000 3.375.000 $ 675,000 1. Compute the contribution margin per unit, and calculate the break-even point in units. Contribution Margin per Unit = 4050000/120000-$33.75 per unit Break-Even Point in Units = 3,375,000/33.75-100,000 units 2. Compute the contribution margin ratio and calculate the break-even point in sales dollars. Contribution Ratio = 4,050,000/7,500,000=54% Break-Even in Sales Dollars = 3,375,000/0.54=6,250,000 3. Using the original information, suppose sales revenues increased by $540,000. Determine by how much profits would increase. Profits will increase by 4. How many units must be sold to earn an after-tax profit of $1,254,000? Assume a tax rate of 34 percent. Units to be Sold = 5. Compute the margin of safety in dollars based on the given income statement. Margin of Safety in Dollars =
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