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Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning...

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Accounting

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next months budget appear below:

Selling price per unit $ 29
Variable expense per unit $ 13
Fixed expense per month $ 13,600
Unit sales per month 1,000

Required:

1. What is the companys margin of safety? (Do not round intermediate calculations.)

2. What is the companys margin of safety as a percentage of its sales? (Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34).)

.

Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows:

Amount Percent of Sales
Sales $ 122,000 100 %
Variable expenses 48,800 40 %
Contribution margin 73,200 60 %
Fixed expenses 18,000
Net operating income $ 55,200

Required:

1. What is the companys degree of operating leverage?

2. Using the degree of operating leverage, estimate the impact on net operating income of a 19% increase in sales.

3. Construct a new contribution format income statement for the company assuming a 19% increase in sales.

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