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Alsatia's contribution margin, Tanner's break even point, Deavila's sales mix shifts

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See attached file for problems.

Want to verify the calculations for question 6, 7 and 8.

6. a) What is company's contribution margin ratio?
b) What is the company's break-even in units?
c) If sales increase by 100 units, by how much should net operating income increase?
d) How many units would the company have to sell to attain target profits of $225,000
e) What is the company's margin of strategy in dollars?
f) What is the company's degree of operating leverage?

7. a) Compute the company's break-even point in units sold.
b) Compute the total variable expenses at the break-even point.
c) How many units would have to be sold to earn a target profit of $9000?
d) the sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?

8. a) Determine the overall break-even point for the company. Show your work!
b) If the sales mix shifts toward Product Q911 with no changes in total sales, what will happen to the break-even point for the company? Explain.

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This solution helps with a problem involving contribution margin, break even point and sales mix shifts. Step by step calculations are given in Excel.

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See the answers attached.

ANSWER TO QUESTION NO:6

a.WHAT IS CONTRIBUTION MARGIN RATIO?
contribution margin ratio= (contribution/sales)*100 35.71428571

b.break even point in units= fixed cost/contribution per unit 6000
fixed cost 300000
contribution per unit 50

c. If sales increase by 100 units operating income will increase by= 100 units*contribuition per unit 5000

d units to be sold to attain the target profit of 225000= (fixed ...

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