Complete the following questions using Microsoft Word or Excel, as appropriate. Review the grading rubric to confirm you are meeting the assignment requirements.
Zaldor Corporation sells a specialized speaker and has the following information for the current year:
|
Per |
Percent |
||
|
Total |
Unit |
of Sales |
|
|
Sales (20,000 units) |
1,200,000 |
60 |
100% |
|
Variable expenses |
800,000 |
40 |
? % |
|
Contribution margin |
400,000 |
20 |
? % |
|
Fixed expenses |
250,000 |
||
|
Net operating income |
150,000 |
Required:
- Calculate the variable expense ratio
- Calculate the contribution margin ratio
- Calculate break even sales in units
- Calculate break even sales in dollars
- How many units must be sold to make a profit of $300,000?
Management is considering increasing the quality of its units by spending $3 more per unit in variable costs and adding a quality inspector for an additional $40,000 annual fixed cost. Management believes this change will increase unit sales by 20% at the same price.
- Calculate the new profit or loss if the changes are implemented.
- Would you recommend management make the changes? Why or why not?