Spencer Company's most recent monthly contribution format income statement is given below:
Sales...........................$60,000
Variable Expenses.......45,000
Contribution Margin......15,000
Fixed Expenses..............18,000
Net operationg loss....(($3,000))
The company sells its only product for $10 per unit. There were no beginning or ending inventories.
Required:
a. What are total sales in dollars at the break-even point?
b. What are total variable expenses at the break-even point?
c. What is the company's contribution margin ratio?
d. If unit sales were increased by 10% and fixed expenses were reduced by $2,000, what would be the company's expected net operating income? (Prepare a new income statement.)