complete solution

Problem 3 (Compute the Margin of Safety) Mariah Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below: Selling price ............................... 1'30 per unit Variable expenses ...................... 1'20 per unit Fixed expenses .......................... P1500 per month Unit sales ................................... 1,000 units per month Required: 1. Compute the company's margin of safety. 2. Compute the company's margin of safety as a percentage of its sales. Problem 4 (Compute and Use the Degree of Operating Leverage) Yiruma Company sells musical instruments. The company's most recent monthly contribution format income statement follows: Amount Percent of Sales Sales P80,000 100% Variable expenses M M Contribution margin 48,000 _ 0249. Fixed expenses M Net operating income . w Required: 1. Compute the company's degree of operating leverage. 2. Using the degree of operating leverage, estimate the impact on net operating - income of a 5% increase in sales. _ . . 3_ Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales