Question

Last month when Holiday Creations, Inc., sold 39,000 units, total sales were $296,000, total variable expenses were $248,640, and fixed expenses were $37,300.

**Required:**

1. What is the company’s contribution margin (CM) ratio?

2. What is the estimated change in the company’s net operating
income if it can increase total sales by $1,800? **(Do not
round intermediate calculations.)**

Answer #1

Total | Per unit (total / 39,000) | |

Sales | $296,000 | $7.5897 |

Less: Variable expense | ($248,640) | ($6.3754) |

Contribution margin | $47,360 | $1.2143 |

Fixed expenses | $37,300 | |

Net Operating Income |
$10,060 |

Contribution margin ratio = (Contribution Margin / Sales) *100

Contribution margin ratio = ($47,360 / $296,000) *100 = 16%

Contribution margin ratio = 16%

b) If Total sales increase by $1,800 then Net operating income is

Sales (New) = $296,000 + $1,800 = $297.800

Contribution margin = sales * Contribution margin ratio = $297,800 *16% = $47,648

Contribution Margin = $47,648

Less Fixed cost = $37,300

**Net Operating Income = $10,348**

**Change in Net operating Income = $10,348 - $10,060 =
$288**

**Increase in net operating income due to increase in
sales by $1,800 = $288**

Last month when Holiday Creations, Inc., sold 36,000 units,
total sales were $309,000, total variable expenses were $219,390,
and fixed expenses were $35,100. Required: 1. What is the company’s
contribution margin (CM) ratio? 2. What is the estimated change in
the company’s net operating income if it can increase total sales
by $2,700? (Do not round intermediate calculations.)
1.
Contribution margin ratio
%
2.
Estimated change in net operating
income

Last month when Holiday Creations, Inc., sold 40,000 units,
total sales were $295,000, total variable expenses were $215,350,
and fixed expenses were $39,300.
Required:
1.
What is the company’s contribution margin (CM) ratio?
2.
Estimate the change in the company’s net operating income if it
were to increase its total sales by $2,200.

Last month when Holiday Creations, Inc., sold 45,000 units, total
sales were $303,000, total variable expenses were $254,520, and
fixed expenses were $37,600.
2.
Estimate the change in the company’s net operating income if it
were to increase its total sales by $2,500.

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
302,000
$
20
Variable expenses
211,400
14
Contribution margin
90,600
$
6
Fixed expenses
73,200
Net operating income
$
17,400
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
316,000
$
20
Variable
expenses
221,200
14
Contribution
margin
94,800
$
6
Fixed
expenses
78,000
Net operating
income
$
16,800
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
Break Even Point in unit sales
Break
Even Point in dollar sales
2. Without resorting to computations, what is the total
contribution margin at...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
310,000
$
20
Variable expenses
217,000
14
Contribution margin
93,000
$
6
Fixed expenses
73,200
Net operating income
$
19,800
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
604,000
$
40
Variable expenses
422,800
28
Contribution margin
181,200
$
12
Fixed expenses
154,800
Net operating income
$
26,400
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow: Total Per Unit Sales $ 300,000
$ 20 Variable expenses 210,000 14 Contribution margin 90,000 $ 6
Fixed expenses 77,400 Net operating income $ 12,600 Required: 1.
What is the monthly break-even point in unit sales and in dollar
sales? 2. Without resorting to computations, what is the total
contribution margin at the break-even point? 3-a. How many units
would have to be sold each...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total Per Unit
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Variable expenses 224,000 14
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Fixed expenses 75,000
Net operating income $ 21,000
Required: 1. What is the monthly break-even point in unit sales
and in dollar sales? 2. Without resorting to computations, what is
the total contribution margin at the break-even point? 3-a. How
many units would have to be sold each month...

Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total Per Unit
Sales $ 320,000 $ 20
Variable expenses 224,000 14
Contribution margin 96,000 $ 6
Fixed expenses 75,000
Net operating income $ 21,000
Required: 1. What is the monthly break-even point in unit sales
and in dollar sales? 2. Without resorting to computations, what is
the total contribution margin at the break-even point? 3-a. How
many units would have to be sold each...

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