Reference no: EM132548905

Zoom Company manufactures and sells a telephone answering machine. The company's income statement for the most recent year is given below:

                                              Total Per               Unit                    Percent

Sales (20,000 units)           $ 1,200,000            $. 60                100

Variable expenses                  900,000                  45                ?

Contribution Margins.              300,000                 15                 ?

Fixed Expenses                         240,000

Net Income                             60,000

Based on the above data, answer the following questions.

Instructions:

Question a. Compute the company's CM ratio and variable expense ratio.

Question b. Compute the company's break-even point in both units and sales dollars the above three approaches to compute the break-even.

Question c. Assume that sales increase by Br. 400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net income increase?