Problem 3-24A (Algo) Assessing simultaneous changes in CVP relationships using the equation method LO 3-1, 3-2, 3-3, 3-4, 3-5

Finch Corporation sells hammocks; variable costs are $69 each, and the hammocks are sold for $130 each. Finch incurs $347,700 of fixed operating expenses annually.

Required

a1. Determine the sales volume in units and dollars required to attain a $61,000 profit.

a2. Prepare an income statement using the contribution margin format.

b. Finch is considering implementing a quality improvement program. The program will require a $6 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $40,050 for advertising. Assuming that the improvement program will increase sales to a level that is 4,900 units above the amount computed in Requirement a, prepare a budgeted income statement using the contribution margin format.

c. Determine the new break-even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented.

Determine the sales volume in units and dollars required to attain a $61,000 profit.

Sales volume in units
Sales volume in dollars

Prepare an income statement using the contribution margin format.

FINCH CORPORATION
Income Statement

Finch is considering implementing a quality improvement program. The program will require a $6 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $40,050 for advertising. Assuming that the improvement program will increase sales to a level that is 4,900 units above the amount computed in Requirement a, prepare a budgeted income statement using the contribution margin format.

FINCH CORPORATION
Income Statement

Determine the new break-even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented. (Do not round intermediate calculations. Round your answers to nearest whole number. Round "Margin of safety" answer to 1 decimal place. (i.e., 0.234 should be entered as 23.4))

Break-even point in units
Break-even point in sales dollars
Margin of safety		%