a specialized speaker and has the following information for the current year:
Total
Per Unit
Percent of Sales
Sales (25,000 units)
1,250,000
50
100%
Variable expenses
750,000
30
? %
Contribution margin
500,000
20
? %
Fixed expenses
400,000
Net operating income
100,000
Required:
1. Calculate the variable expense ratio
2. Calculate the contribution margin ratio
3. Calculate break even sales in units
4. Calculate break even sales in dollars
5. How many units must be sold to make a profit of $250,000?
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,. Management believes this change will by 20% at the same price.
6. Calculate the new profit or loss if the changes are implemented.
7. Would you the changes? Why or why not?
You should use an Excel spreadsheet for your answers.
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