Required:
Redo the company's contribution format income statement assuming that the company sells 3,400 units.
The following is Arkadia Corporation's contribution format income statement for last month:
Sales $1,200,000
Variable costs 800,000
Contribution Margin 400,000
Fixed costs 300,000
Net Operating Income $100,000
The company has no beginning or ending inventories and produced and sold 20,000 units during the month.
Required:
a. What is the company's contribution margin ratio?
b. What is the company's break-even in units?
c. If sales increase by 100 units, by how much should net operating income increase?
d. How many units would the company have to sell to attain a target profit of $125,000?
e. What is the company's margin of safety in dollars?
f. What is the company's degree of operating leverage?