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Try Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of
Try Spirit
Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 65% is cost of goods sold, while the remaining 35% relates to variable operating expenses. The company sells each carton of calendars for $13.50.
1. | Compute the number of cartons of calendars that Try Spirit Calendars must sell each month to break even. |
2. | Compute the dollar amount of monthly sales that the company needs in order to earn $304,000 in operating income (round the contribution margin ratio to two decimal places). |
3. | Prepare the company's contribution margin income statement for June for sales of 480,000 cartons of calendars. |
4. | What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? |
5. | By what percentage will operating income change if July's sales volume is 11% higher? Prove your answer. |
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