Oak Hammock Company prepared the following income statement for its 15,000 bucket sales for the first quarter of 2024:

Pro Format Income Statement - Quarter 1, 2024 Sales	$ 120,000.00
COGS (40% variable and 60% fixed)	$ 75,000.00
Gross Profit	$ 45,000.00
S&A expenses:
Sales commissions (10% of sales as a network sales agents)	$ 12,000.00
Fixed selling expense	$ 4,000.00
Fixed administrative expense	$ 3,000.00
Total S&A expenses	$ 19,000.00
Operating Income before taxes	$ 26,000.00
Income taxes (40%)	$ 10,400.00
Operating Income after taxes	$ 15,600.00

Tasks: Answer the following questions:

a) Calculate the contribution margin ratio.  

b) Calculate the total fixed costs.  

c) Calculate the break-even point in units.  

d) Calculate the break-even point sales dollars.  

e) Calculate how much sales dollars the company need to generate to earn a target operating income after taxes of $31,200.  

f) Assume that the company expects to sell 20,000 buckets. What is the operating leverage?  

g) Using the operating leverage, if sales increase by 10% of the expected sales, by how much will operating income increase?    

h) Using the operating leverage, if sales decrease by 15% of the expected sales, what is the projected operating income?  

Answer rating: 100% (QA)

Here are the answers to the questions a Contribution margin ratio Selling price Variable cost per un... View the full answer