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Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows:
| | Total |
| Sales | $ 9,450,000 |
| Total variable cost | 5,575,500 |
| Contribution margin | $ 3,874,500 |
| Total fixed cost | 2,625,189 |
| Operating income | $ 1,249,311 |
Required:
1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $per unit
1(b). Compute contribution margin per unit. Enter your answer to the nearest cent. $per unit
1(c). Compute contribution margin ratio. %
1(d). Compute break-even point in units. units
1(e). Compute break-even point in sales dollars. $
2. How many units must be sold to earn operating income of $345,261? units
3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected. $
4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars.
| Margin of safety in units | | units |
| Margin of safety in sales dollars | $ | |
5. Compute the degree of operating leverage. Round your answer to one decimal place.
6. Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar. $
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