Reference no: EM133122461

Question - Suppose that company Almax, Ltd. has a target net income of €150,000, and the tax rate on income is 36%. The contribution margin per unit is €420 and the company incurs €170,000 in fixed costs.

1. What is (i) the quantity of units that the company has to sell to earn the target net income, and (ii) the degree of operating leverage of the company if it earns the target income?

1. (i) 310 units; (ii) 0.37

2. (i) 963 units; (ii) 1.73

3. (i) 840 units; (ii) 1.73

4. (i) 1,010 units; (ii) 1.00

2. the contribution margin per unit and the fixed costs indicated above, what is the quantity of units that Almax, Ltd. must sell in order to break even?

1. 720

2. 405

3. 963

4. 520

3. If the fixed costs of Almax, Ltd dropped to exactly €0, what would be the operating income per unit?

1. €420

2. €435

3. €405

4. Insufficient data