Crane sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The companys income statement from last month is as follows:

		Total		Per Unit
Sales revenue		$650,000		$50
Variable expenses		260,000		20.00
Contribution margin		390,000		$30.00
Fixed expenses		252,000
Operating income		$ 138,000

(a)

What is Cranes contribution margin ratio? Its variable cost ratio? (Round ratios to 2 percentage places, e.g. 0.38 = 38%.)

Contribution margin ratio		_______________________	%
Variable cost ratio		______________________	%

(b1)

Compute breakeven sales. (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.)

Breakeven sales

$____________

(b2)

What is Cranes margin of safety?

Margin of safety

$________

(c)

If Cranes sales were to increase by $100,000 with no change in fixed expenses, by how much would operating income increase? (Use the rounded contribution margin ratio calculated in the previous part to compute breakeven sales.)

Net Operating income will increase by

$___________

(d)

Cranes managers have determined that variable costs per unit will increase by 20% beginning next month. To offset this increase in costs, they are considering a 10% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Crane sells. What will be Cranes expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)

Operating income

$_____________