Chapter $8$

Davison Co$.$ prepared the following contribution format income statement based on a sales volume of $10,000$ units $($the relevant range

of production is $5,000$ units to $15,000$ units$)$

Soles

Variable expenses

Contribution margin

Fixed expenses

Net operating income

Required:

$($Answer each question independently and always refer to the original data unless instructed otherwise.$)$

$8-6$ If the selling price increased by$\text{'}$ $$2$ per unit and the sales volume decreased by $1,000$ units, what would be the net operating

income?

$8\mathrm{.}7$ If the variable cost per unit increased by $$1,$ spending on advertising inereased by $$15,000,$ and unit sales incressed by $2\mathrm{.}500$

units, what would be the net operating income?

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

$8-9$ What is the breakeven point in sales dollars?

$8-10$ How many units must be sold to achieve a target profit of $$50,000?$

$8-11$ What is the mangin of safety in dollars? What is the margin of safety percentage?

The Foundational $15($continued$)$

$8-6.$ The new net operating income would be computed as follows:

$\frac{\text{s}\text{a}\text{l}\text{e}\text{s}}{\text{u}\text{n}\text{i}\text{t}\text{s}}=\frac{200,000}{10,000}$

$=20$

$=20+$$$2$ raise

$=22$

$8-7.$ The new net operating income would be computed as follows:

Chapter $8$

Davison Co$.$ prepared the following contribution format income statement based on a sales volume of $10,000$ units $($the relevant range

of production is $5,000$ units to $15,000$ units$)$:

Sales

Variable expenses

Contribution margin

Fixed expenses

Net operating income

Required:

$($Answer each question independently and always refer to the original data unless instructed otherwise.$)$

$8-6$ If the selling price increased by$\text{'}$ $$2$ per unit and the sales volume decreased by $1,000$ units, what would be the net operating

income?

$8\mathrm{.}7$ If the variable cost per unit increased by $$1,$ spending on advertising increased by $$15,000,$ and unit sales increased by $2\mathrm{.}500$

units, what would be the net operating income?

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

$8-9$ What is the breakeven point in sales dollars?

$8-10$ How many units must be sold to achiese a target prosit of $$50\mathrm{.}000?$

$8-11$ What is the margin of safety in dollars? What is the margin of safety percentage?

The Foundational $15($continued$)$

$8-6.$ The new net operating income would be computed as follows:

$\frac{\text{s}\text{a}\text{l}\text{e}\text{s}}{\text{u}\text{n}\text{i}\text{t}\text{s}}=\frac{200,000}{10,000}$

$=20$

$=20+$$$2$ raise How did we get $$12$ per unit