Klamath Company produces a single product. The projected income statement for the coming year is as follows:
Sales (54,600 units @ $34) ........$1,856,400
Total variable cost ....................1,064,700
Contribution margin..................$ 791,700
Total fixed cost .........................801,850
Operating income ....................$ (10,150)
Required:
1. Compute the unit Contribution margin and the units that must be sold to break even.
2. Suppose 10,000 units are sold above breakeven. What is the operating income?
3. Compute the Contribution margin ratio. Use the Contribution margin ratio to compute the break-even point in sales revenue. Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?