BREAK EVEN POINT ANALYASIS
accountguru1. Sensabaugh Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.
Sales (1800 units) $91,800
Variable expenses 59,400
Contribution margin 32,400
Fixed expenses 27,000
Net operating income 5,400
If the company sells 1,600 units, what is the total contribution margin?
2. Last year, Farrer Corporation had sales of $1,500,000, variable expenses of $900,000, and fixed expenses of $400,000. What would be the dollar sales at the break-even point?
3. Kendall Company has sales of 1,000 units at $60 a unit. Variable expenses are 30% of the selling price. If total fixed expenses are $30,000, hat is the degree of operating leverage?
4. The following is Allison Corporation's contribution format income statement for last month:
Sales | $800,000 |
Less variable expenses | 300,000 |
Contribution margin | 500,000 |
Less fixed expenses | 400,000 |
Net income | $100,000 |
The company has no beginning or ending inventories. The company produced and sold 10,000 units last month.
a. What is the company's contribution margin ratio?
b. What is the company's break-even sales in dollars?
c. If sales increase by 200 units, by how much should net operating income increase?
d. How many units would the company have to sell to attain target profits of $120,000?
e. What is the company's margin of safety percentage?
f. What is the company's degree of operating leverage?
13 years ago
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