Reference no: EM133075458

Questions -

Q1. Jamina Corporation sells a product for $6 per unit. Fixed expenses total $37,500 per month and variable expenses are $2 per unit. How many units must be sold each month for Jamina to realize a profit before income taxes of 15% of sales?

Q2. Erin Corporation manufactures and sells two types of shirts, standard and deluxe. Erin expects the following operating results next year for each type of towel:

	Standard	Deluxe
Sales	$450,000	$50,000
Total Variable Expenses	$360,000	$20,000

If Erin expects to incur $57,600 in fixed expenses next year, what is the break-even point?

Q3. Smile Company invested $31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = $1,562.50; Fixed selling and administrative costs = $625.00; Fixed manufacturing costs = $312.50. To accomplish the company objective, how much must be the price of one cabinet?

Q4. Vicks Inc. produced and sold 240,000 bags of organic fertilizers as follows:

Sales Revenue - $1,896,000

Manufacturing Margin - 1,092,000

Contribution Margin - 912,000

Fixed Costs:

Manufacturing - $520,000

Selling and Administrative - 270,000

a. How much is the company's margin of safety in units?

b. What is he company's degree of operating leverage?