Wayne’s Workshop shows average revenue per customer of $400. Monthly fixed costs are $40,000. Variable costs...

Wayne’s Workshop shows average revenue per customer of $400. Monthly fixed costs are $40,000. Variable costs in the last month were in total $32,000. During that month the workshop had 1,200 customers.

Required

1. Calculate the contribution margin ratio.

2. Calculate the breakeven point.

3. What was the profit last month?

4. Prepare an income statement for last month using the contribution format.

5. What was the operating leverage?

6. Using the operating leverage formula, calculate the new operating income if sales fall by 5%.

Expert Solution

ekkarill92 answered 1 year ago

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