Submitted by: Submitted by dantran
Views: 125
Words: 489
Pages: 2
Category: Business and Industry
Date Submitted: 07/26/2014 08:04 PM
WEEK 2 ASSIGNMENTS
DAN TRAN
3-1
Requirement1:
The sales volume increases by 50 units.
Original net operating income $8,000
Change in contribution margin
(50 units × $8.00 per unit) = 400 ( New net operating income $8,400
The new income statement would be:
Total Per Unit
Sales (8,050 units) $209,300 $26.00
Variable expenses 144,900 18.00
Contribution margin 64,400 $8.00
Fixed expenses 56,000
Net operating income $8,400
Requirement 2:
The sales volume declines by 50 units.
Original net operating income $8,000
Change in contribution margin
(-50 units × $8.00 per unit) (400) ( New net operating income $7,600
The new income statement would be:
Total Per Unit
Sales (7,950 units) $206,700 $26.00
Variable expenses 143,100 18.00
Contribution margin 63,600 $8.00
Fixed expenses 56,000
Net operating income $7,600
Requirement 3:
The sales volume is 7,000 units
The new income statement would be:
Total Per Unit
Sales (7,000 units) $182,000 $26.00
Variable expenses 126,000 18.00
Contribution margin 56,000 $ 8.00
Fixed expenses 56,000
Net operating income $0
➢ This is the company's break-even point.
3-4
Requirement1:
Contribution Margin Ratio = Contribution Margin/ Sales = (Sales - Variable Expenses)/ sale = ($300,000 - $240,000)/ $300,000 = 20%
Requirement2:
$1,500X 20% = $300 is the change in net operating income from an increase in total sales of $1,500
3-6
Liman Corporation has a single product whose selling price is $140 and whose variable expense is $60 per unit. The company's monthly fixed expense is...