Net operating income: An income is the difference between the revenue and expenses of a company. A net operating income is an income from the usual operations of a company. Target Profit Analysis: It is an analysis of how much unit sales or dollar sales value a company must be attain to realize the target profit estimated by the company. Contribution margin: The difference between the sales revenue and the variable expenses is called a contribution margin. Break-Even Point: A break-even point is the point where a company is neither making profit nor incurring any loss. 1. (a)Contribution margin ratio and break-even point in balls, and (b) the degree of operating leverage. 2. Contribution margin ratio and break-even point in balls. 3. Required sales in balls to attain net operating income of $90,000. 4. Selling price per unit to be increase. 5. Contribution margin ratio and break-even point in balls. 6. a) Required sales in balls to attain a net operating income of $90,000. b) Preparing contribution format income statement and computation of degree of operating leverage. c) Recommendation of constructing the new plant.

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Chapter 6, Problem 20P

To determine

Net operating income:An income is the difference between the revenue and expenses of a company. A net operating income is an income from the usual operations of a company.

Target Profit Analysis:It is an analysis of how much unit sales or dollar sales value a company must be attain to realize the target profit estimated by the company.

Contribution margin:The difference between the sales revenue and the variable expenses is called a contribution margin.

Break-Even Point:A break-even point is the point where a company is neither making profit nor incurring any loss.

1. (a)Contribution margin ratio and break-even point in balls, and (b) the degree of operating leverage.

2. Contribution margin ratio and break-even point in balls.

3. Required sales in balls to attain net operating income of $90,000.

4. Selling price per unit to be increase.

5. Contribution margin ratio and break-even point in balls.

6. a) Required sales in balls to attain a net operating income of $90,000.

b) Preparing contribution format income statement and computation of degree of operating leverage.

c) Recommendation of constructing the new plant.

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