Problem ACME Corporation
Unit sales
20,000
units
Selling price per unit
$60
per unit
Variable expenses per unit
$45
Fixed expenses
$240,000
Enter a formula into each of the cells marked with a ? below.
Review Problem: CVP Relationships
Compute the CM ratio and the variable expense ratio.
?
Contribution margin per unit
CM ratio
Variable expense ratio
Compute the breakeven.
Breakeven in unit sales
Breakeven in dollar sales
Compute the margin of safety.
Margin of safety in dollars
Margin of safety percentage
Compute the degree of operating leverage.
Sales
Variable expenses
Contribution margin
Net operating income
Degree of operating leverage
Tasks:Prepare solutions for the problem. You should also include additional computations in the worksheets (Microsoft Excel), storing them below the solutions.
Computed the CM ratio and the variable expense ratio.
Computed the breakeven.
Computed the margin of safety.
Computed the degree of operating leverage.
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources (i.e., APA); and displayed accurate spelling, grammar, and punctuation.
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