The following is Alsatia Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories and produced and sold 10,000 units during the month.

Required:

a) What is the company's contribution margin ratio?
b) What is the company's break-even in units?
c) If sales increase by 100 units, by how much should operating income increase?
d) How many units would the company have to sell to attain target operating income of $225,000?
e) What is the company's margin of safety in dollars?
f) What is the company's degree of operating leverage?

Question

The following is Alsatia Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories and produced and sold 10,000 units during the month.

Required:

a) What is the company's contribution margin ratio?
b) What is the company's break-even in units?
c) If sales increase by 100 units, by how much should operating income increase?
d) How many units would the company have to sell to attain target operating income of $225,000?
e) What is the company's margin of safety in dollars?
f) What is the company's degree of operating leverage?

Quizplus · Accepted Answer

The Answer of The following is Alsatia Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories and produced and sold 10,000 units during the month.

Required:

a) What is the company's contribution margin ratio?
b) What is the company's break-even in units?
c) If sales increase by 100 units, by how much should operating income increase?
d) How many units would the company have to sell to attain target operating income of $225,000?
e) What is the company's margin of safety in dollars?
f) What is the company's degree of operating leverage?

The Following Is Alsatia Corporation's Contribution Format Income Statement for Last