The following is Mochenwa Corporation's contribution format income statement for last month: Sales $1,200,000 Less:...
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The following is Mochenwa 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 Operating income $100,000 The company has no beginning or ending inventories and produced and sold 20,000 units during the month. Required (show your workings): 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 operating income increase? d) How many units would the company have to sell to attain target operating income of $125,000? e) What is the company's margin of safety in dollars? f) What is the company's degree of operating leverage? In your response, please show your workings for each question.
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