Question

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $457,000 $457,000 Variable costs 265,060 155,380 Contribution margin 191,940 301,620 Fixed costs 171,000 280,680 Net income $20,940 $20,940

Calculate Contribution margin ratio. (Round answers to 2 decimal places, e.g. 0.32.) Contribution Margin Ratio Blanc Company Noir Company

Compute break-even point in dollars for each company. (Round answers to 0 decimal places, e.g. 1,225.) Break-even Point Blanc Company $ Noir Company $

Compute margin of safety ratio for each company. (Round answers to 3 decimal places, e.g. 0.321.) Margin of Safety Ratio Blanc Company Noir Company

Compute the degree of operating leverage for each company. (Round answers to 1 decimal place, e.g. 1.5.) Degree of Operating Leverage Blanc Company Noir Company

Assuming that sales revenue increases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answers to 0 decimal places, e.g. 1,225.) Blanc Company Noir Company Sales $ $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ $

Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answers to 0 decimal places, e.g. 1,225.) Blanc Company Noir Company Sales $ $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ $

Answer 1

1.

	Blanc Company	Noir Company
Contribution Margin	191,940.00	301,620.00
Sales	457,000.00	457,000.00
Contribution Margin ratio	42.00%	66.00%

2.

	Blanc Company	Noir Company
Fixed Costs	171,000.00	280,680.00
Contribution Margin ratio	42.00%	66.00%
Break-even Point	407,143	425,273

3.

	Blanc Company	Noir Company
Sales	457,000.00	457,000.00
Break-even Point	407,143	425,273
Margin of Safety	49,857	31,727
Margin of Safety ratio	0.109	0.069

4.

	Blanc Company	Noir Company
Contribution Margin	191,940.00	301,620.00
Operating Income	20,940	20,940
Degree of Operating leverage	9.2	14.4

5.

	Blanc Company	Noir Company
Sales	548,400.00	548,400.00
Variable costs	318,072.00	186,456.00
Contribution Margin	230,328.00	361,944.00
Fixed costs	171,000.00	280,680.00
Net Income /(Loss)	59,328.00	81,264.00

6.

	Blanc Company	Noir Company
Sales	365,600.00	365,600.00
Variable costs	212,048.00	124,304.00
Contribution Margin	153,552.00	241,296.00
Fixed costs	171,000.00	280,680.00
Net Income /(Loss)	-               17,448.00	-             39,384.00