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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 | $ 13,050,000 |
| Total variable cost | 7,960,500 |
| Contribution margin | $ 5,089,500 |
| Total fixed cost | 3,490,266 |
| Operating income | $ 1,599,234 |
Required:
1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $fill in the blank 1per unit
1(b). Compute contribution margin per unit. Enter your answer to the nearest cent. $fill in the blank 2per unit
1(c). Compute contribution margin ratio. fill in the blank 3 %
1(d). Compute break-even point in units. fill in the blank 4 units
1(e). Compute break-even point in sales dollars. $fill in the blank 5
2. How many units must be sold to earn operating income of $456,924? fill in the blank 6 units
3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected. $fill in the blank 7
4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars.
| Margin of safety in units | fill in the blank 8 | units |
| Margin of safety in sales dollars | $fill in the blank 9 | |
5. Compute the degree of operating leverage. Round your answer to two decimal place. fill in the blank 10
6. Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar. $fill in the blank 11
Answer & Explanation
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