Reference no: EM133173347

Question - Below is information for Blue Company. Using this information, answer the following questions on the "Calculation" tab in the file. Show your work and format appropriately.

Blue company has prepared the following contribution format income statement basedon a sales volume of 1,000 units (the relevant range of production is 500 to 1,500 units):

Sales $20,000

Variable expenses 12,000

Contribution margin 8,000

Fixed expenses 6,000

Net operating income $2,000

Required -

1. What is the contribution margin per unit?

2. What is the contribution margin ratio?

3. What is the variable expense ratio?

4. If sales increase to 1,001 units, what would be the increase in net operating income?

5. If sales decline to 900 units, what would be the net operating income?

6. If the selling price increases by $2 per unit and thes ales volume decreases by 100 units, what would be the net operating income?

7. If the variable cost per unit increases by $1, spending on advertising incrases by $1,500, and unit sales incrase by 250 units, what would be the net operating income?

8. What is the break-even point in unit sales?

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

10. How many units must be sold to achieve a target profit of $5,000?

11. What is the margin of safety in dollars?

12. What is the degree of operating leverage?