Laraia Corporation Has Provided the Following Contribution Format Income Statement

question 69

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:

Number Of Employees

The total count of individuals working for a company, including full-time, part-time, and temporary staff.

Step-down Method

An approach to allocating service department costs to production departments based on a hierarchical sequence of services provided.

Administrative Department

A segment of a company responsible for managing the general operations and ensuring the smooth functioning of the business.

Custodial Department

A division within an organization responsible for maintenance, cleaning, and security services.