Question

Wiechart Industries had provided the data below. Assume the information is within the relevant range.

Sales                        $320,000

Variable Expenses     192,000

Fixed Expenses          121,600

Net Operating income 6,400

ANSWER THE FOLLOWING:  Briefly show how you arrived at your answer.

1. What is the Break-even point in units?

2. What is the current Margin of Safety?

3. What is the contribution margin ratio?

4. By what amount will net operating income increase if sales increase by $2,000?

Answer 1

1. Break-even point (in $)

Note: Since in question unit is not given therefore break-even in units cannot be calculated

Working Note:

2. Margin of Safety:

3. Contribution Margin Ratio:

4. Operating income will increases if sales increases by $2000

Changes in operating Income will be $800

Working Note:

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