Reference no: EM133093298

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. Bona Company has consistently generated these operating results for the past several years:

Sales 100%

Cost of Sales

Variable 50%

Fixed 10% 60%

Gross Profit 40%

Operating Expenses

Variable 20%

Fixed 15% 35%

Operating Income 5%

For the coming year, the expected total sales amounts to $19.50 million. In dollars, what amount should be the break-even sales?

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 the company's degree of operating leverage?