X Chapter 20 Weekly Activities Questions and Template.xlsx File Edit Insert Format Help Calibri 11 BIU$ A JI A B 1 Problem 2 2 Denver Doors produces wooden doors, which it sells for $50 per unit. 3 The company's forecast income statement for October 20YY is as follows: 4 5 Denver Doors: income statement for October 20YY $ 6 Sales revenue (2,000 doors @ $50 per unit) 100,000 7 Variable cost of goods sold (2,000 doors @ $15 per unit) 30,000 8 Fixed cost of goods sold 10,000 9 Gross profit 60,000 10 Administrative salaries 15,000 11 Shipping and handling expense (2,000 doors @ $1 per unit) 2.000 12 Variable selling expenses (2,000 doors @ $4 per unit) 8.000 13 Fixed advertising expenses 20,000 14 Depreciation of administrative office furniture 5,000 15 Net income 10,000 16 17 Required: 18 A. Prepare a contribution margin format income statement for October 20Y 19 20 Denver Doors: 21 Contribution margin-based income statement for Oct 20YY 22 $ $ 23 Sales revenue (2,000 doors @ $50 per unit) 24 Less variable costs 25 Variable cost of goods sold (2,000 doors @ $15 per unit) 26 Shipping and handling expense (2,000 doors @ $1 per unit) 27 Variable selling expenses (2,000 doors @ $4 per unit) 28 Total Variable costs Contribution margin 30 Less fixed costs 31 Fixed cost of goods sold 32 Administrative salaries 33 Fixed advertising expenses 34 Depreciation of administrative office furniture 35 Total Fixed costs Net income 37 38 B. Calculate the company's Unit Contribution Margin. 39 CMU = SP/U - VC/U per unit 40 41 C. Calculate the company's Break-even units and Break-even Dollars. (Round up your answer) 42 BEU = FCICMU units 43 BE$ =BEU X SP/U 29 36 48 49 45 D. Calculate the required sales unit for October 20YY to earn a net income of $25,000? 46 Required sales unit = (FC + Target profit)/CMU 47 units E. Using your answer from part a), calculate Denver's operating leverage. OL = CM/NI 50 51 F. Determine the amount of net income that Denver would 52 earn during October 2049 if sales revenue increases by 20%. % Increase in NI = OLX% increase in sales therefore, increased NI = Current NI x (1 + % increase in NI) 53 54 Problom 2 Protom