This past year Castle Rook Industries sold 2,000 of its designer-chrome chess sets. The company reported total sales of $400,000 and variable product costs of $180,000. The company also reported variable selling expenses of $40,000 and fixed expenses of $125,000.
1) What is the variable expense ratio?
2) What is break-even point in unit sales?
3) What is the contribution margin ratio?
4) What is the break-even point in dollars?
5) What is the total contribution margin?
6) How many units must be sold to achieve a target profit of $75,000?
7) If the variable costs increase and the fixed expenses decrease, will the contribution margin increase or decrease?
8) If the company sells 2,001 units, what would be the increase in net operating profit?
9) If sales decrease to 1,500 units, what would the net profit be?
10) If variable costs increased by $10 per unit, spending on advertising increased by $30,000 and sales increased by 300 units, what would be the net profit?