Voltar Company manufactures and sells a specialized cordless telephone for high electromagnetic radiation environments. The company's contribution format income statement for the most recent I year is given below:

Total

$$1,200,000$

$300,000$

Per Unit

Percent of Sales

$100\%$

$7\%$

Sales $(20,000$ units$)$

Variable expenses.

Contribution margin

Fixed expenses

$240,000$

Not operating income.

$ $60,000$

$$60$

$45$

$$15$

$7\%$

Management is anxious to increase the company's profit and has asked for an analysis of a number of items.

Required:

$1.$ Compute the company's CM ratio and variable expense ratio.

$2.$ Compute the company's break$-$even point in both unit sales and dollar sales. Use the equation method. $3.$ Assume that sales increase by $$400,000$ next year. If cost behavior patterns remain unchanged.

by how much will the company's net operating income increase? Use the CM ratio to com pute your answer. Refer to the original data. Assume that next year management wants the company to earn a $4.$

profit of at least $$90,000.$ How many units will have to be sold to earn this target profit? $+5.$ Refer to the original data. Compute the company's margin of safety in both dollar and per centage form.

$9\mathrm{.}00$ x $10\mathrm{.}88$ in

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$12$:$31$ P

$15/04/2$