The following is AAAsCorporation's contribution format income statement for last month: CSV...
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The following is AAAsCorporation's contribution format income statement for last month:
CSV Income Statement
$
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.
You are required to calculate the following for the company management.
i.What is the company's contribution margin ratio? ii.What is the company's break-even in units? iii.If sales increase by 100 units, by how much should net income increase? iv.How many units would the company have to sell to attain target profits of $125,000? v.What is the company's margin of safety in dollars? vi.What is the company's degree of operating leverage?
The following is AAAsCorporation's contribution format income statement for last month:
CSV Income Statement | $ |
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.
You are required to calculate the following for the company management.
i.What is the company's contribution margin ratio?
ii.What is the company's break-even in units?
iii.If sales increase by 100 units, by how much should net income increase?
iv.How many units would the company have to sell to attain target profits of $125,000?
v.What is the company's margin of safety in dollars?
vi.What is the company's degree of operating leverage?
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