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:
|Total||Per Unit||Percent of Sales|
|Sales (20,000 units)||1,200,000||60||100%|
|Variable expenses||800,000||40||? %|
|Contribution margin||400,000||20||? %|
|Net operating income||150,000|
- 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?