Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense

For each of the following independent situations, calculate the amount(s) required.

Required:

1. At the break-even point, Jefferson Company sells 95,000 units and has fixed cost of $351,900. The variable cost per unit is $0.35. What price does Jefferson charge per unit? Round to the nearest cent. $

2. Sooner Industries charges a price of $114 and has fixed cost of $370,500. Next year, Sooner expects to sell 12,000 units and make operating income of $194,000. What is the variable cost per unit? What is the contribution margin ratio? Round your variable cost per unit answer to the nearest cent. Enter the contribution margin ratio as a percentage, rounded to two decimal places.

Variable cost per unit	$
Contribution margin ratio		%

3. Last year, Jasper Company earned operating income of $14,520 with a contribution margin ratio of 0.15. Actual revenue was $242,000. Calculate the total fixed cost. Round your answer to the nearest dollar, if required. $

4. Laramie Company has variable cost ratio of 0.55. The fixed cost is $106,190 and 22,900 units are sold at breakeven. What is the price? What is the variable cost per unit? The contribution margin per unit? (Round answers to the nearest cent.)

Price	$
Variable cost per unit	$
Contribution margin per unit $ 5. Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $50 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $75,500. Required: Calculate the degree of operating leverage. (Round your answer to the nearest tenth.) ______ 6. Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Head-First Company had planned to sell 5,000 bicycle helmets at $71 each in the coming year. Unit variable cost is $48 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $65,500. The degree of operating leverage is 1.8. Now Head-First expects to increase sales by 10% next year. Required: 1. Calculate the percent change in operating income expected. % 2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1. $