Question 2 (12 Marks) ...

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Question 2 (12 Marks)
The following is Arkadia Corporation's contribution format income statement for last month:


Sales	$1,200,000
Less variable expenses	800,000
Contribution margin	400,000
Less fixed expenses	300,000
Net income	$100,000


The company has no beginning or ending inventories and produced and sold 20,000 units during the month.

Required:

a. What is the company's contribution margin ratio?
b. What is the company's break-even in units?
c. If sales increase by 100 units, by how much should net income increase?
d. How many units would the company have to sell to attain target profits of $125,000?
e. What is the company's margin of safety in dollars?
f. What is the company's degree of operating leverage?

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