Question $3(19$ points$)$

Rolling Stoney Co$.$ prepared the following contribution format income statement based on a

sales volume of $10,000$ units $($the relevant range of production is $5,000$ units to $15,000$ units$)$:

Required:

$($Answer each question independently and always refer to the original data unless instructed

otherwise.$)$

a$.$ What is the contribution margin per unit?

b$.$ What is the contribution margin ratio?

c$.$ What is the variable expense ratio?

d$.$ If sales declined to $9,000$ units, what would be the net operating income?

e$.$ What is the break$-$even point in unit sales?

f$.$ How many units must be sold to achieve a target profit of $$50,000?$

g$.$ Assume that the amounts of the company's total variable expenses and total fixed

expenses are reversed. In other words, assume that the total variable expenses are

$$60,000$ and the total fixed expenses are $$120,000.$ Under this scenario and assuming

that total sales remain the same, what is the degree of operating income?

h$.$ Using the degree of operating leverage that you computed in the previous question,

what is the estimated percent increase in net operating income of a $5\%$ increase in

sales?