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