Problem #3: Home Office Supply Company manufactures and sells desktop printers. Management is looking for...
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Accounting
Problem #3: Home Office Supply Company manufactures and sells desktop printers. Management is looking for ways to improve the Companys profitability. You have been asked to assist management in analyzing its costs and profitability so that better informed decisions can be made regarding the pricing of the printers. The desktop printers are currently sold at a price of $110 each. The raw materials, labor, and other variable overhead costs associated with the manufacture of each printer amount to $75 per printer. Fixed costs for the Company amount to $224,000.
Requirements (please show your computations):
Determine the breakeven point in both units and sales dollars.
Determine the sales volume in both units and sales dollars that is required to attain a profit of $140,000. Verify your answer by preparing an income statement using the contribution margin approach format.
Using the information in the income statement prepared in requirement b, determine the magnitude of operating leverage.
What would be the percentage increase in net income if there was a 15 percent increase in sales volume?
Determine the margin of safety dollar amount and percentage between sales required to attain a profit of $140,000 and break-even sales.
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