1.
Last month
when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000,
total variable expenses were $240,000, and fixed expenses were $45,000.

Required:

a.

What is the company’s contribution
margin (CM) ratio?

b.

Estimate the change in the
company’s net operating income if it were to increase its total sales by
$1,500.
2.
[The
following information applies to the questions displayed below.]
Maxson Products distributes a
single product, a woven basket whose selling price is $8 and whose variable
cost is $6 per unit. The company’s monthly fixed expense is $5,500.
Required:

a.

Compute for the company’s
breakeven point in unit sales using the equation method.
b.Compute for the
company’s breakeven point in sales dollars using the equation method and
the CM ratio.(Do
not round intermediate calculations.Round
your CM ratio to 2 decimal places.)
CM ratio______________________
Breakeven point in dollar
sales________________________________










4.
Mohan
Corporation is a distributor of a sun umbrella used at resort hotels. Data
concerning next month’s budget appear below:




Selling price

$25

per unit

Variable expenses

$15

per unit

Fixed expenses

$8,500

per month

Unit sales

1,000

units per month


Required:

a.

Compute the company’s margin of
safety.

b. Compute the company’s margin of safety as a
percentage of its sales. (%)