Answer:
1. a. Total Fixed Cost $468,000
b. Variable cost per unit sold $1.25
c. Contribution margin per unit $10.5
d. Break even point in unit sales 44,571 units
e. Margin of Safety 10.8%
f. Degree of operating Leverage 2.3%
Explanation:
Margin of Safety : Current sales in units - Break even Sales in units
Break even Point in unit sales = Fixed cost / contribution margin
Degree of operating leverage = % change in operating leverage / % change in sales
{[667088 - 525218 ] / 667,088]} / {[55,000 - 50,000] / 55,000}
21 / 9.09 = 2.3%
Contribution Margin : Selling price per unit - Variable cost per unit
$32 - $21.5
2. <u>Income Statement 2022</u>
Sales 2,848,000
Cost of goods sold 1,998,732
Gross Margin 849,268
Selling and administrative cost 579,250
Operating profit 270,018
Interest Expense 9,642
Net profit 260,376
