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Spirit Rocks Calendars imprints calendars with college names. The company has fixed expenses of $ 1,095,000 each month plus variable expenses of $.650 per carton of calendars. Of the variable expense, 69 % is cost of goods sold, while the remaining 31 % relates to variable operating expenses. The company sells each carton of calendars for $16.50

Requirments :

1.	Compute the number of cartons of calendars that Spirit rock Calendars must sell each month to break even.
2.	Compute the dollar amount of monthly sales that the company needs in order to earn $308,000 in operating income (round the contribution margin ratio to two decimal places).
3.	Prepare the company's contribution margin income statement for June for sales of 455, 000 cartons of calendars.
4.	What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales?
5.	By what percentage will operating income change if July's sales volume is 11 % higher? Prove your answer.

Requirement 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Using the basic income statement equation you determined above solve for the number of cartons to break even. The breakeven sales is cartons. Requirement 2. Compute the dollar amount of monthly sales Spirit Rock Calendars needs in order to earn $308,000 in operating income. Begin by determining the formula. (Round the contribution margin ratio to two decimal places.) The monthly sales needed to earn $308,000 in operating income is Requirement 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? Begin by determining the formula. =Marginofsafety(indollars) The margin of safety is What is the operating leverage factor at this level of sales? Begin by determining the formula. =Operatingleveragefactor (Round the operating leverage factor to three decimal places.) The operating leverage factor is Requirement 5. By what percentage will operating income change if July's sales volume is 11% higher? Prove your answer. (Round the percentage to two decimal place If volume increases 11%, then operating income will increase % Prove your answer. (Round the percentage to two decimal places.)

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