Reference no: EM132381275
Question :
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows:
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Total
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Sales
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$ 9,000,000
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Total variable cost
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6,300,000
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Contribution margin
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$ 2,700,000
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Total fixed cost
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1,450,200
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Operating income
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$ 1,249,800
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Required:
1(a). Compute variable cost per unit. Enter your answer to the nearest cent.
1(b). Compute contribution margin per unit. Enter your answer to the nearest cent.
1(c). Compute contribution margin ratio.
1(d). Compute break-even point in units.
1(e). Compute break-even point in sales dollars.
2. How many units must be sold to earn operating income of $187,800?
3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected.
4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars.
Margin of safety in units
Margin of safety in sales dollars
5. Compute the degree of operating leverage. Round your answer to one decimal place.
6. Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar.