Hampshire company spreadsheet - Requirement 1 Units Price...

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Requirement 1 Units Price Sales 60,000 $12.50 Variable Costs 60,000 $6.00 Fixed Costs 295525 Net Income Requirement 2 Contribution Margin per Unit in Dollars = Selling Price – Variable Costs Selling Price Variable Costs $12.50 $6.00 Contribution Margin Ratio = Contribution Margin/Selling Price Contribution Margin Selling Price $6.50 $12.50 Requirement 3 Break-Even Point = Fixed Costs / Contribution Margin Fixed Costs Contribution Margin $295,525 $6.50 Break-Even Point in Units X Selling Price per Unit = Break-Even Point Sales Break-Even Point in Units Selling Price per Unit 45,465 $12.50 Requirement 4A Margin of Safety in Units = Current Unit Sales – Break-Even Point in Unit Sales Current Unit Sales Break-Even Point in Sales 60,000 45,465 Requirement 4B Margin of Safety in Dollars = Current Sales in Dollars – Break-Even Point Sales in Dollars Current Sales in Dollars Break-Even Point in Dollars $750,000 $568,317 Requirement 4C
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Margin of Safety as a Percentage = Margin of Sales in Units / Current Unit Sales Margin of Safety in Units Current Unit Sales 14,535 60,000 Requirement 5 Degree of Operating Leverage = Contribution Margin / Operating Income Contribution Margin Operating Income $390,000.00 $94,475.00 Requirement 6 Units $ Per Unit Sales 72,000 $12.50 Variable Costs 72,000 $6.00 Fixed Costs Net Income Operating Leverage Times % Increase 2.71343673 20% Prior Income $94,475.00 From Part 1 Increase 82.56% Prior Income X XX% Above Total $172,475.00 Requirement 7 Targeted Income = (Fixed Costs + Target Income) / Contribution Margin Fixed Costs + Target Income Divided by Contribution Margin Fixed Costs $295,525 $6.50 Target Income $150,000 $6.50 Total $445,525 $6.50
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