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2 (28 points) Dan's Dairy produces gourmet ch Total fixed costs are $125,000 per period. m...

Question:

2 (28 points) Dans Dairy produces gourmet ch Total fixed costs are $125,000 per period. m ese. Each pound of cheese sells fo
2 (28 points) Dan's Dairy produces gourmet ch Total fixed costs are $125,000 per period. m ese. Each pound of cheese sells for $8 and has a variable cost of Show all supporting calculations. Compute the unit contribution margin Compute the contribution margin ratio If sales revenue for the firm is $900.000.compute total contribution margin and operating income. If sales revenue for the firm is $900,000, compute the operating leverage factor. d. Compute the breakeven point in units Compute the sales dollars needed to earn an operating income of $80,000.

Answers

a. unit contribution margin ($8 sale price - $6) $2
b.. contribution margin ratio ( contribution margin / sales ) ($2 / $8) 0.25
c. total contribution margin ratio ($900,000*0.25) $225,000
c.operating income ($225,000 contribution margin -125,000) $100,000
d.operating leverage (contribution / profits) (225,000/100,000) 2.25
d.break even point in units (fixed costs / contribution per unit) (125,000/2) 62,500 units
e.sales dollars needed (fixed costs +operating income ) / contribution margin ratio (125,000+80,000) / 0.25 820,000
.

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