Assignment 1-10% Question 1: The following is Arkadia Corporation's contribution format income statement for last month:...

Transcribed Image Text:

Assignment 1-10% Question 1: The following is Arkadia Corporation's contribution format income statement for last month: Sales Less variable expenses Contribution margin Less fixed expenses Net income $1,200,000 800,000 400,000 300,000 $100,000 The company has no beginning or ending inventories and produced and sold 20,000 units durin the month. Required: (6*2=12) a. What is the company's contribution margin ratio? b. What is the company's break-even in units? c. If sales increase by 100 units, by how much should net income increase? d. How many units would the company have to sell to attain target profits of $125,000? e. What is the company's margin of safety in dollars? f. What is the company's degree of operating leverage? Question 2: Ryan Corporation is a charitable organization that supplies boxes of food free to families in need. Fixed costs are $1,000,000. Each box of food costs $80. The corporation has budgeted appropriation of $2,400,000 for all costs. Assignment 1-10% Question 1: The following is Arkadia Corporation's contribution format income statement for last month: Sales Less variable expenses Contribution margin Less fixed expenses Net income $1,200,000 800,000 400,000 300,000 $100,000 The company has no beginning or ending inventories and produced and sold 20,000 units durin the month. Required: (6*2=12) a. What is the company's contribution margin ratio? b. What is the company's break-even in units? c. If sales increase by 100 units, by how much should net income increase? d. How many units would the company have to sell to attain target profits of $125,000? e. What is the company's margin of safety in dollars? f. What is the company's degree of operating leverage? Question 2: Ryan Corporation is a charitable organization that supplies boxes of food free to families in need. Fixed costs are $1,000,000. Each box of food costs $80. The corporation has budgeted appropriation of $2,400,000 for all costs.