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  1. business
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  3. a company produces and sells a single product. the

A company produces and sells a single product. The product's current selling price per unit...

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Accounting

A company produces and sells a single product. The product's current selling price per unit is $300 and variable expenses per unit are $60. Fixed expenses are $120,000 each month. The current sales level is 1,300 units per month.

a) What is the company's break even point each month in units?

b) What is the company's current margin of safety in dollars?

c) If the company would like to achieve a profit of $21,600 during the month, how many units must it sell? (ignore taxes)

d) (i) Calculate the company's current operting leverage. Round to 3 decimal places i.e., XX.XXX (ii) If sales increase by 15%, by how much will net operating income increase as a percentage?

e) The company is thinking about using a different part in production that will result in a $50 increase in variable expenses. This will lead to a monthly sales unit decrease of 500 units. (i) What will be the dollar change in net operating income if this occurs? (ii) Should the company do this from a financial perspective?

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