1.Contribution MarginandContribution Margin Ratio

For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales$ 17,100

Food and packaging $5,131

Payroll 4,300

Occupancy (rent, depreciation, etc.) 4,659

General, selling, and administrative expenses 2,500

___________

$16,590

__________

Income from operations $510

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Assume that thevariable costsconsist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

A. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) ________ Million

B. What is Wicker Company's contribution margin ratio? Round to one decimal place. ________%

C. How much would income from operations increase if same-store sales increased by $1,000 million for the coming year, with no change in the contribution margin ratio orfixed costs? Round your answer to the closest million. ____________ Million

2.Sales Mixand Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. Thefixed costsare $400,000, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unitvariable costfor each product are as follows:

Products Unit Selling Price Unit Variable Cost

Bats $70 $50

Gloves 180 110

A. Compute the break-even sales (units) for both products combined. _________ Units

B. How many units of each product, baseball bats and baseball gloves, would be sold atbreak-even point?

Baseball Bats _________ Units

Baseball glovees _______ Units

3. Break-Even Sales andSales Mixfor a Service Company

Zero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics:

Fuel$ 10,396

Flight crew salaries 7,963

Airplane depreciation 3,761

Variable cost per passengerbusiness class 55

Variable cost per passengereconomy class 45

Round-trip ticket pricebusiness class 555

Round-trip ticket priceeconomy class 315

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight. If required round the answers to the nearest whole number.

A. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product is 20% business class and 80% economy class seats. _________ Seats

B. How many business class and economy class seats would be sold at thebreak-even point?

Business class seats at break-even ____________ Seats

Economy class seats at break-even ____________ Seats

4.If Canace Company, with abreak-even pointat $383,500 of sales, has actual sales of $590,000, what is the margin of safety expressed (A) in dollars and (B) as a percentage of sales? Round the percentage to the nearest whole number.

A. $206,500

B. 35%

4.pt2 If the margin of safety for Canace Company was 25%,fixed costswere $1,588,125, andvariable costswere 75% of sales, what was the amount of actual sales (dollars)?

(Hint:Determine the break-even in sales dollars first.)

$______________