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SolutionsFeb2021

# SolutionsFeb2021 - Exercise 6-1(20 minutes 1 The new income...

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Exercise   6-1  (20 minutes) 1. The new income statement would be: Total Per Unit Sales (8,050 units) ...... \$209,300 \$26.00 Variable expenses .......   144,900       18.00     Contribution margin ..... 64,400 \$      8.00     Fixed expenses ...........     56,000     Net operating income. . \$        8,400     You can get the same net operating income using the following  approach. Original net operating income... \$8,000  Change in contribution margin  (50 units  ×  \$8.00 per unit) ......         400       New net operating income ........ \$8,400   2. The new income statement would be: Total Per Unit Sales (7,950 units) ............. \$206,700 \$26.00 Variable expenses ..............   143,100       18.00     Contribution margin ............ 63,600 \$      8.00     Fixed expenses ..................     56,000     Net operating income ......... \$        7,600     You can get the same net operating income using the following  approach. Original net operating income .............. \$8,000 Change in contribution margin  (-50 units  ×  \$8.00 per unit) ................       (400     ) New net operating income ................... \$7,600

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Exercise 6-1  (continued) 3. The new income statement would be: Total Per Unit Sales (7,000 units) ........ \$182,000 \$26.00 Variable expenses ........   126,000       18.00     Contribution margin ...... 56,000 \$      8.00     Fixed expenses .............     56,000     Net operating income .... \$                    0    Note: This is the company's break-even point.
Exercise 6-3  (10 minutes) 1. The company’s contribution margin (CM) ratio is: Total sales .............................. \$300,000

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SolutionsFeb2021 - Exercise 6-1(20 minutes 1 The new income...

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