Laraia Corporation Has Provided the Following Contribution Format Income Statement

question 134

Essay

Laraia Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
Required:
a. What is the contribution margin per unit?
b. What is the contribution margin ratio?
c. What is the variable expense ratio?
d. If sales increase to 3,050 units, what would be the estimated increase in net operating income?
e. If sales decline to 2,900 units, what would be the estimated net operating income?
f. If the selling price increases by $4 per unit and the sales volume decreases by 200 units, what would be the estimated net operating income?
g. If the variable cost per unit increases by $5, spending on advertising increases by $3,000, and unit sales increase by 450 units, what would be the estimated net operating income?
h. What is the break-even point in unit sales?
i. What is the break-even point in dollar sales?
j. Estimate how many units must be sold to achieve a target profit of $54,000.
k. What is the margin of safety in dollars?
l. What is the margin of safety percentage?
m. What is the degree of operating leverage?
n. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

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Definitions:

Displaced Point Pattern

A spatial configuration in which points (representing locations or events) are distributed in an irregular or non-uniform manner, leading to variations in density.

Diffused Point Pattern

A distribution pattern where elements or observations are spread out over an area without a clear concentration in any single location.

Back Channel Cue

Non-verbal signals used during communication to indicate comprehension, agreement, or interest without interrupting the speaker.

Body Buffer Zone

The personal space around an individual that they prefer not to be invaded by others, varying in size depending on social and cultural norms.