Compute how much should operating income increase

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Reference no: EM132706798

Kingston Company distributes a high-quality bird feeder that sells for $30 per unit. Variable costs are $12 per unit, and fixed costs total $270,000 annually.

Required:

Answer the following independent questions:

Problem 1: What is the product's CM ratio?

Problem 2: Use the CM ratio to determine the break-even point in sales dollars.

Problem 3: The company estimates that sales will increase by $60,000 during the coming year due to increased demand. By how much should operating income increase?

Reference no: EM132706798

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