Solution-What will be the increase in net income of this

What will be the increase in net income of this company

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Reference no: EM133033019

Question - LEE Company has provided the following information about the company

Sales [1200 units] $178000

Manufacturing Overhead (Fixed) $28000

Manufacturing Overhead (Variable) $20000

Selling cost [variable] $19600

Selling cost [fixed] $12000

Variable admin expenses $24500

Fixed admin expenses $15000

Capacity of producing 6000 units

Units produced 8500 units

REQUIRED -

1. Calculate the net income using contribution approach.

2. Find CM per unit and the CMR.

3. Determine the breakeven point in units and dollars.

4. Calculate margin of safety in dollars and in percentage.

5. The sales manager believes that a project of the company could increase sales by 20% but variable cost will also increase by $15000 and fixed cost will increase by $ 25000. Should the company accept the project or reject?

6. Determine the sales revenue necessary to generate before tax profit of $55,000.

7. Determine sales revenue necessary to generate after-tax profit of $37000 if tax rate is 20%.

8. Calculate degree of leverage [DOL] and if sales increases by 15%, what will be the increase in net income of this company.

Reference no: EM133033019

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What will be the increase in net income of this company

Reference no: EM133033019

Reference no: EM133033019

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