The following is Arkadia Corporation's contribution format income statement for last month: Sales.............................................. P1,200,000 Variable expenses......................... 800,000 Contribution margin ....................... 400,000 Fixed expenses ............................. 300,000 Net operating income .................... P 100,000 The company has no beginning or ending inventories and produced and sold 20,000 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 net operating income increase?
The following is Arkadia Corporation's contribution format income statement for last month:
Sales.............................................. P1,200,000
Variable expenses......................... 800,000
Contribution margin ....................... 400,000
Fixed expenses ............................. 300,000
Net operating income .................... P 100,000
The company has no beginning or ending inventories and produced and sold 20,000 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 net operating income increase?
d. How many units would the company have to sell to attain target profits of P125,000?
e. What is the company's margin of safety in pesos?
f. What is the company's degree of operating leverage?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
