The income statement for Asia's Company to Asia Company for knitting winter clothes Income Statement Year...

Transcribed Image Text:

The income statement for Asia's Company to Asia Company for knitting winter clothes Income Statement Year ended December, 31 2010 Sales (50,000 units at $30 each) Variable Cost (50,000 at $20) $1,500,000 ($1000,000) $500,000 ($350,000) $150,000 Contribution Margin Fixed Cost EBIT (Operating Profit) Given this income statement: a) Compute the Break-even points b) Compute the contribution margin rate c) Using the contribution margin rate, what is the Break-even in dollar d) Find the sales (in units &dollars) needed to earn a profit of $25,000. e) Compute the Degree of Operating Leverage. f) Compute the impact of 20% increase in sales on operating leverage. The income statement for Asia's Company to Asia Company for knitting winter clothes Income Statement Year ended December, 31 2010 Sales (50,000 units at $30 each) Variable Cost (50,000 at $20) $1,500,000 ($1000,000) $500,000 ($350,000) $150,000 Contribution Margin Fixed Cost EBIT (Operating Profit) Given this income statement: a) Compute the Break-even points b) Compute the contribution margin rate c) Using the contribution margin rate, what is the Break-even in dollar d) Find the sales (in units &dollars) needed to earn a profit of $25,000. e) Compute the Degree of Operating Leverage. f) Compute the impact of 20% increase in sales on operating leverage.