Compute the following items:
a. Unit contribution margin.
b. Contribution margin ratio.

c. Break-even in units.

d. Break-even in dollar sales.
e. What would be the sales in units that will assure the company to gain its $325,000 profit?

f. What would be the sales in dollars that will assure the company to gain its $165,500 profit?

g. Margin of safety.
h. What is the degree of operating leverage if the company? What is this number mean to the company?

i. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?

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Iron Decor manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates: Total Per Unit Sales (20,000 units). . S1,000,000 $50.00 Direct materials.. $200,000 $10.00 Direct labor (variable)... Manufacturing overhead: Variable. $50,000 $2.50 $70,000 $3.50 Fixed.. $80,000 $4.00 Selling & administrative: Variable. $100,000 $5.00 Fixed.. S30,000 S1.50 Iron Decor manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates: Total Per Unit Sales (20,000 units). . S1,000,000 $50.00 Direct materials.. $200,000 $10.00 Direct labor (variable)... Manufacturing overhead: Variable. $50,000 $2.50 $70,000 $3.50 Fixed.. $80,000 $4.00 Selling & administrative: Variable. $100,000 $5.00 Fixed.. S30,000 S1.50

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Ans A Particulars Per unit Per unit Seling price per unit 5000 Less Variable cost per unit Direct ma... View the full answer