Question 9 options:

Rounding / Entry Rules:

Follow the rules on the Final Exam Information Sheet.

Question:

The following is Thomas Ltd.'s contribution margin income statement for the year.

Sales$2,000,000

Variable expenses1,600,000

Contribution margin400,000

Fixed expenses200,000

Operating income$200,000

Thomas Ltd. sold 4,000 units during the year.

Required:

Using cost-volume-profit analysis, answer the following questions.

What is the company's contribution margin ratio?

What is the company's breakeven sales in units?

If sales increase by 200 units, by how much would operating income increase?

How many units would the company have to sell to attain target operating income of $250,000?

What is the company's margin of safety in dollars?

What is the company's degree of operating leverage?