Calendars imprints calendars with college names. The company has fixed expenses of $1,095,000 each month plus variable expenses of $6.50 per carton of calendars. Of the variable expense, 74% is cost of goods sold, while the remaining 26% relates to variable operating expenses. The company sells each carton of calendars for $16.50. 1. Begin by determining the basic income statement equation. - - = Operating income Compute the number of cartons of calendars that College Spirit Calendars must sell each month to break even. 2. Compute the dollar amount of monthly sales that the company needs in order to earn $308,000 in operating income (round the contribution margin ratio to two decimal places). Begin by determining the formula. ( + ) / = Target sales in dollars 3. Prepare the company's contribution margin income statement for June for sales of 450,000 cartons of calendars 4.
Calendars imprints calendars with college names. The company has fixed expenses of $1,095,000 each month plus variable expenses of $6.50 per carton of calendars. Of the variable expense, 74% is cost of goods sold, while the remaining 26% relates to variable operating expenses. The company sells each carton of calendars for $16.50. 1. Begin by determining the basic income statement equation. - - = Operating income Compute the number of cartons of calendars that College Spirit Calendars must sell each month to break even. 2. Compute the dollar amount of monthly sales that the company needs in order to earn $308,000 in operating income (round the contribution margin ratio to two decimal places). Begin by determining the formula. ( + ) / = Target sales in dollars 3. Prepare the company's contribution margin income statement for June for sales of 450,000 cartons of calendars 4.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Calendars imprints calendars with college names. The company has fixed expenses of $1,095,000 each month plus variable expenses of $6.50 per carton of calendars. Of the variable expense, 74% is cost of goods sold, while the remaining 26% relates to variable operating expenses. The company sells each carton of calendars for $16.50.
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1.
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Begin by determining the basic income statement equation.
Compute the number of cartons of calendars that College Spirit Calendars must sell each month to break even. |
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2.
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Compute the dollar amount of monthly sales that the company needs in order to earn $308,000 in operating income (round the contribution margin ratio to two decimal places). Begin by determining the formula.
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3.
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Prepare the company's contribution margin income statement for June for sales of 450,000 cartons of calendars |
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4.
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What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales?
Begin by determining the formula.
What is the operating leverage factor at this level of sales? Begin by determining the formula.
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5.
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By what percentage will operating income change if July's sales volume is 16%higher? Prove your answer. |
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