Reference no: EM132973621

Khan Corporation has provided the following contribution format income statement. Answer each question independently based on the original data:

Sales (4,000 units) $ 160,000

Variable expenses 80,000

Contribution margin 80,000

Fixed expenses 50,000

Net operating income $ 30,000

Required:

Problem a. What is the break-even point in dollar sales?

Problem b. Estimate how many units must be sold to achieve a target profit of $55,000.

Problem c. What is the margin of safety in dollars?

Problem d. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 30% increase in sales volume?

Problem e. If the variable cost per unit increases by $4, spending on advertising increases by $4,000, and unit sales increase by 500 units, what would be the estimated net operating income?