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Compute how many unit will to be sold to earn target profit

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Reference no: EM132628971

The company's contribution income statement for the next year is given below:

Sale (20000 units) = $1200000

Less- Variable cost= ($900000)

Contribution margin = $300000

Less- Fixed expenses = ($240000)

Net operating income = $60000

Instruction:

Problem 1. Calculate the company's sale ratio and variable expense ratio.

Problem 2. Compute the company's break even points in both unit sales and dollar sales.

Problem 3. Assume that sales increase $400000 next year, by how much company's net operating income will increase.

Problem 4. The management wants the company to earn a profit of at least $90000. How many unit will have to be sold to earn this target profit?

Problem 5. Calculate the company's marginal safety both dollar and percentage form.

Problem 6. A) Calculate company's degree of operating leverage at the present level of sales. B) If the company sales increase by 8% next year, by what percentage you would expect net operating income to increase. C) Verify your answer to be increased.

Reference no: EM132628971

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