FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The company sells T-shirts with identical unit costs and selling prices. Shown below are the
revenue and cost information:
Unit Variable Data (per unit)
Monthly Fixed Costs
Selling price
$80.00
Rent
$140,000
$200,000
$40,000
Variable Cost
$30.00
Salaries
Advertising
Other fixed costs
$20,000
The company has no beginning or ending inventories. The company produced and sold 10,000
units last month.
Required:
a) Prepare the contribution format income statement for last month.
b) Compute the breakeven sales in dollars. Compute the margin of safety percentage last
month.
c) Compute the degree of operating leverage.
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Transcribed Image Text:The company sells T-shirts with identical unit costs and selling prices. Shown below are the revenue and cost information: Unit Variable Data (per unit) Monthly Fixed Costs Selling price $80.00 Rent $140,000 $200,000 $40,000 Variable Cost $30.00 Salaries Advertising Other fixed costs $20,000 The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. Required: a) Prepare the contribution format income statement for last month. b) Compute the breakeven sales in dollars. Compute the margin of safety percentage last month. c) Compute the degree of operating leverage.
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