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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Exercise 4-36 Basic Cost-Volume-Profit Concepts
Klamath Company produces a single product. The projected income statement for the coming year is as follows:
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Sales (54,600 units @ $34)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $1,856,400
Total variable cost                                               1,064,700
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Contribution margin                                     $  791,700 Total fixed cost                                                                                                              801,850
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Operating income                                          $  (10,150)
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Â
Required:
1.      Compute the unit contribution margin and the units that must be sold to break even.
2.      Suppose 10,000 units are sold above breakeven. What is the operating income?
3.      Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four deci- mal places, and round the sales revenue to the nearest dollar.) Suppose that  revenues are $200,000 more than expected for the coming year. What would the total operating income be?
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