Reference no: EM133025789

Question - The following is Alsatian Corporation's contribution format income statement from last month:

Sales (2000 units x $70) $140,000

Less: Variable Costs 84,000

Contribution Margin 56,000

Less: Fixed Expenses 24,000

Operating Income $32,000

The company has no beginning or ending inventories and produced and sold 2,000 units during the month.

Required -

A. What is the company's break-even sales in $?

B. If the sales volume increases by 10% and variable costs/unit decreases by $2.00, what will the new operating income be? Produce a CVP statement?

C. What sales in units would be required to attain an operating income of $39,000?

D. What is the company's margin of safety in dollars and stated as a %?

E. Part 1: What is the company's degree of operating leverage based on the original data?

Part 2: Using your answer to Part 1, if sales increased by 15% above the amounts in the original data, how much in $ would net income increase?

F. If the business requires an operating income of 20% of sales, what will be the required sales in $, assuming all costs and selling prices remain as in the original data?

G. Suppose Alsatian Corporation had a tax rate of 25% and wants to earn an after tax net income of $24,000. Calculate the sales in units that would be needed from the original data?