Question

Jellico Inc.’s projected operating income (based on sales of 450,000 units) for the coming year is as follows:
Total____
Sales ............... $11,700,000
Total variable cost ........ 8,190,000
Contribution margin ......... $ 3,510,000
Total fixed cost .......... 2,254,200
Operating income ......... $ 1,255,800

Required:
1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars.
2. How many units must be sold to earn operating income of $296,400?
3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected.
4. For the projected level of sales, compute the margin of safety in units, and then in sales
dollars.
5. Compute the degree of operating leverage. (Note: Round answer to two decimal places.)
6. Compute the new operating income if sales are 10 percent higher than expected.


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  • CreatedSeptember 22, 2015
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