Reference no: EM132746489

Riley Company manufactures and sells automated door locks for upscale apartments in the city. The following information is given.

Sales (40,000 units) $ 2,400,000
Variable expenses $ 1,800,000
Fixed expenses $ 480,000

In an effort to increase the company's profits the management as ask for an analysis of the items below.

Problem a) Construct the company's contribution margin(CM) income statement and compute the CM ratio and variable expense ratio.

Problem b) Compute the company's break-even point in both units and sales dollars. Use the equation method.

Problem c) Assume sales increase by 5,000 units next year and cost patterns remained unchanged, how much will be the company's new net operating income.

Problem d) Based on the data given if management wants to earn a profit of $150,000, how many units must be sold to achieve this target.