Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $ 12,150,000 Total variable cost 7,533,000 Contribution margin $ 4,617,000 Total fixed cost 2,875,878 Operating income $ 1,741,122 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $per unit 1(b). Compute contribution margin per unit. Enter your answer to the nearest cent. $per unit 1(c). Compute contribution margin ratio. % 1(d). Compute break-even point in units. units 1(e). Compute break-even point in sales dollars. $ 2. How many units must be sold to earn operating income of $376,542? units 3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected. $ 4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars. Margin of safety in units units Margin of safety in sales dollars $ 5. Compute the degree of operating leverage. Round your answer to one decimal place. 6. Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar.
CH7-Q50:
Hi I have asked this question before, but i haven't received explanation on requirement # 3. Also, last question was not answered. Please answer #6 (last question) and fully explain # 3. thanks!
Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows:
| Total | |
| Sales | $ 12,150,000 |
| Total variable cost | 7,533,000 |
| Contribution margin | $ 4,617,000 |
| Total fixed cost | 2,875,878 |
| Operating income | $ 1,741,122 |
Required:
1(a). Compute variable cost per unit. Enter your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit. Enter your answer to the nearest cent.
$per unit
1(c). Compute contribution margin ratio.
%
1(d). Compute break-even point in units.
units
1(e). Compute break-even point in sales dollars.
$
2. How many units must be sold to earn operating income of $376,542?
units
3. Compute the additional operating income that Jellico would earn if sales were $50,000 more than expected.
$
4. For the projected level of sales, compute the margin of safety in units, and then in sales dollars.
| Margin of safety in units | units | |
| Margin of safety in sales dollars | $ |
5. Compute the degree of operating leverage. Round your answer to one decimal place.
6. Compute the new operating income if sales are 10% higher than expected. Enter your answer to the nearest whole dollar.
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