Use the cm ratio to determine the break-even point in sales

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Reference no: EM13579079

Stratford Company distributes a lightweight lawn chair that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 annually.

1.What is the product's CM ratio? (Do not round intermediate calculations. Omit the "%" sign in your response.)

2.Use the CM ratio to determine the break-even point in sales dollars. (Do not round intermediate calculations. Round your answer to the nearest dollar amount. Omit the "tiny_mce_markerquot; sign in your response.)

3.The company estimates that sales will increase by $45,000 during the coming year due to increased demand. By how much should net operating income increase?

4.Refer to the original data. Assume that the company sold 37,500 units last year. The sales manager is convinced that a 15% reduction in the selling price, combined with a $68,000 increase in advertising expenditures, would increase annual unit sales by 50%.

Reference no: EM13579079

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