Memofax, Inc., produces memory enhancement kits for fax machines. Sales have bee
ID: 2354894 • Letter: M
Question
Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below:
Compute the company's CM ratio and its break-even point in both units and dollars.(Omit the "%" and "$" signs in your response.)
The sales manager feels that an $6,900 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $81,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss? (Use the incremental approach in preparing your answer.)(Omit the "$" sign in your response.)
Can anyone tell me if my answer is wrong or not?? If not, plz write down your step that how u get the answer!! thanks!!!
Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below:
Explanation / Answer
1)Selling price per unit = $40 Variable cost per unit = (312000/13000) = $24 Contribution per unit = $40-$24 = $16 CM Ratio = 16*100/40 = 4*10 = 40% Fixed Expenses = 232000 Break-even point in dollars = (232000/40)*100 = 580000 Break-even point in units = 580000/40 = 14500 and 2nd is also correct.