Reference no: EM132527250

Question - Company JET makes phone cases

The Company's condensed income (or loss) statement is to be found below

Sales: 270000 (13500 units x 20 USD)

Variable expenses 189000

Fixed expenses 90000

Net Loss - 9000

One part of things to be solved:

1. Calculate the companies CM ratio.

2. Calculate break-even point (in units).

3. Calculate break-even point (in dollars).

4. With incremental approach, what would be the effect on income statement if marketing budget would to increase by 9000 USD per month, with CEO believing that it will increase the sales by 71000 USD?

5. Not related to 4, but on its own. What if the selling price would reduce by 11% and marketing budget would increase by 4000 USD? Assume it would double the sales of phone cases on per unit basis. Produce new contribution format income statement.

6. Again not related to 4 and 5. CEO believes, that they need to give a free sticky cover with each phone case sold to make it a more suitable product. That would mean an increase in cost by 0.5 USD per unit; CEO wants to make a profit of 4550 USD; How many units should be sold to make these profits? What is the degree of operating leverage here?