2. Cutlass Company's projected profit for the coming year is as follows: Total Per Unit...
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2. Cutlass Company's projected profit for the coming year is as follows: Total Per Unit Sales $200,000 $20 Total variable cost 120,000 Contribution margin 80,000 8 Total fixed cost 64,000 Contribution margin $16,000 Required (40 marks): a. Compute the variable cost ratio. Compute the contribution margin ratio. b. Compute the break-even point in units. c. Compute the break-even point in sales dollars. d. How many units must be sold to earn a profit of $30,000? e. Using the contribution margin ratio computed in Requirement 1, compute the additional profit that Cutlass would earn if sales were $25,000 more than expected. f. For the projected level of sales, compute the margin of safety in units and in sales dollars. g. Calculate the degree of operating leverage. Now suppose that Cutlass revises the forecast to show a 30% increase in sales over the original forecast. What is the percent change in operating income expected for the revised forecast? What is the total operating income expected by Cutlass after revising the sales forecast
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