Sattler Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
Required:
a. What is the contribution margin per unit?
b. What is the variable expense ratio?
c. If sales decline to 7,900 units, what would be the estimated net operating income?
d. If the variable cost per unit increases by $5, spending on advertising increases by $2,000, and unit sales increase by 3,400 units, what would be the estimated net operating income?
e. What is the break-even point in dollar sales?
f. Estimate how many units must be sold to achieve a target profit of $50,400.
g. What is the margin of safety percentage?
h. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Question

Sattler Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
  Required:
a. What is the contribution margin per unit?
b. What is the variable expense ratio?
c. If sales decline to 7,900 units, what would be the estimated net operating income?
d. If the variable cost per unit increases by $5, spending on advertising increases by $2,000, and unit sales increase by 3,400 units, what would be the estimated net operating income?
e. What is the break-even point in dollar sales?
f. Estimate how many units must be sold to achieve a target profit of $50,400.
g. What is the margin of safety percentage?
h. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Quizplus · Accepted Answer

The Answer of Sattler Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
  Required:
a. What is the contribution margin per unit?
b. What is the variable expense ratio?
c. If sales decline to 7,900 units, what would be the estimated net operating income?
d. If the variable cost per unit increases by $5, spending on advertising increases by $2,000, and unit sales increase by 3,400 units, what would be the estimated net operating income?
e. What is the break-even point in dollar sales?
f. Estimate how many units must be sold to achieve a target profit of $50,400.
g. What is the margin of safety percentage?
h. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Sattler Corporation Has Provided the Following Contribution Format Income Statement