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P6.56B (LO 1,2,3) JAX Corporation sells a single product for $40. Its management...

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Question

Accounting

P6.56B (LO 1,2,3) JAX Corporation sells a single product for $40. Its management estimates the following revenues and costs for the year 2022:
Net sales
Direct materials
Direct labour
Manufacturing overhead-variable
Manufacturing overhead-fixed
Instructions
a. Assuming fixed costs and net sales are spread evenly throughout the year, calculate JAX's monthly break-even point in (1) units and (2) dollars.
b. Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual operating income.
b.CM ratio =40%
c. Assuming JAX Corporation increases its selling price by 30% and all other factors (including demand) remain constant, determine by what percentage annual operating income will increase.
d. Assume the price remains at $40 per unit and variable costs remain the same per unit, but fixed costs increase by 30% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual operating income calculated in part (b).
e. Determine the sales required to earn an operating income of $360,000 after tax. JAX Corporation's income tax rate is 40%.
20,000
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