Ivanhoe sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: Total Per unit Sales revenue: 689000. 53 Variable expenses 275600. 21.20 Contribution margin 413400. 31.80 Fixed expenses. 279000. Operating income. 134400 Contribution margin ratio: 60% Variable cost ratio: 40% Breakeven sales: 465000 a) what's Ivanhoe's margin of safety? B) if Ivanhoe sales were to increase by 200,00 with no change in fixed expenses by how much would operating income increase? C) Ivanhoe's 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 12% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Ivanhoe sells. What will be Ivanhoe's expected operating income if the price increase is implemented?

Answer rating: 100% (QA)

ANSWER a To calculate Ivanhoes margin of safety we use the formula Margin of Safety Actual Sales Bre... View the full answer