Solutions Chapter 6

Solutions Chapter 6 - Exercise61 1 Sales(10,100units...

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Exercise   6-1   1. The new income statement would be: Total Per Unit Sales (10,100 units) $353,500 $35.00 Variable expenses   202,000       20.00     Contribution margin 151,500 $15.00 Fixed expenses   135,000     Net operating income $      16,500     You can get the same net operating income using the following  approach. Original net operating income $15,000 Change in contribution margin  (100 units  ×  $15.00 per unit)       1,500     New net operating income $16,500 2. The new income statement would be: Total Per Unit Sales (9,900 units) $346,500 $35.00 Less variable expenses   198,000       20.00     Contribution margin 148,500 $15.00 Less fixed expenses   135,000     Net operating income $      13,500     You can get the same net operating income using the following  approach. Original net operating income .............. $15,000  Change in contribution margin  (-100 units  ×  $15.00 per unit) ............     (1,500     ) New net operating income ................... $13,500   3. The new income statement would be: Total Per Unit Sales (9,000 units) $315,000 $35.00 Variable expenses   180,000       20.00     Contribution margin 135,000 $15.00 Fixed expenses   135,000     Net operating income $                      0   
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Note: This is the company’s break-even point. Exercise 6-3  1. The company’s contribution margin (CM) ratio is: Total sales $200,000 Total variable expenses   120,000     = Total contribution margin 80,000 ÷  Total sales $200,000 = CM ratio 40 % 2. The change in net operating income from an increase in total 
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