D D E F Problem 1: CM Income Statement, Breakeven, Required sales units and What-if Scenario Malcom Inc produces glass doors, which it sells for $80 per unit. The company's forecast income statement for October 20YY for producing and selling 5,000 doors is as follows: Malcom Inc. Income Statement for October 20YY $ Sales revenue (5,000 doors @ $80 per unit) 400,000 Variable cost of goods sold (5,000 doors @ $30 per unit) 150,000 Fixed cost of goods sold 98,000 Gross profit 152,000 o Administrative salaries 20,000 1 Shipping and handling expense (5,000 doors @ $1 per unit) 5,000 2 Variable selling expenses (5,000 doors @ $3 per unit) 15,000 3 Fixed advertising expenses 12,000 4 Other administrative fixed costs 8,000 5 Net incomo 92,000 6 7 Required: 8 A. Prepare a contribution margin format income statement for October 20YY. 9 0 Malcom Inc. 1 Contribution margin-based income statement for October 20YY 2 $ 3 4 5 6 7 8 9 0 -1 -2 3 4 5 -6 -7 36 37 38 B. Calculate the company's Unit Contribution Margin (CMU). 39 CMU = SP/U - VC/U per unit 40 41 C. Calculate the company's Break-even units and Break-even Dollars. 42 BEU = FC/CMU units 43 BES = BEUX SP/U 44 45 D. Calculate the required sales unit for October 20YY to earn a net income of $184,000? 46 Required sales unit = (FC + Target profit)/CMU units 47 50 48 E. Using your answer from part a), calculate Malcom's operating leverage. 49 OL = CM/NI 51 F. Determine the followings if Malcom's sales revenue increases by 10% 52 during October 20YY: 53 ) % Increase in Net Income: 54 ) Dollar amount by which Net Income would increase 55 56 57 58