EXERCISE 4-3 Computing and Using the Contribution Margin Ratio; Computing the

Break-Even Point

In March, Mitchell Limited had sales of $250,000 (50,000 units), total variable expenses of

$190,000, and total fixed expenses of $36,000.

Required:

1. What is the company's CM ratio?

2. Using the CM ratio, calculate the break-even level of sales in dollars.

3. Estimate the change in the company's operating income if it increased its total sales by

$20,000.