Reference no: EM132974335
Khan Corporation has provided the following contribution format income statement. Answer each question independently based on the original data:
Sales (4,000 units) $ 160,000
Variable expenses 80,000
Contribution margin 80,000
Fixed expenses 50,000
Net operating income $ 30,000
Required:
Problem a. What is the break-even point in dollar sales?
Problem b. Estimate how many units must be sold to achieve a target profit of $55,000. $5250
Problem c. What is the margin of safety in dollars?
Problem d. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 30% increase in sales volume?
Problem e. If the variable cost per unit increases by $4, spending on advertising increases by $4,000, and unit sales increase by 500 units, what would be the estimated net operating income?
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