Question 1
XYZ Company has the following information:
Price per unit
VC per unit
Fixed cost per year
** Do not include dollar signs or commas. Round final answer to the nearest whole
dollar, unless otherwise stated. Your answer should only include digits. For example, if
the correct answer is $1,010. you MUST enter 1010 All other variations will be marked
wrong. Ie $1,010.0 or $1010 or 1,010.00. ONLY 1010 is accepted.
For ratios or percentages do not include the % sign. ie 50% should be entered as 50 not
50% or .50 **
Required:
1. Compute CM per unit.
2. Compute the CM ratio.
%
3. What is the breakeven in units?
Question 2
Income statements for two different companies are as follows:
Green Apple Red Apple
Company
Company
Sales
$400,000
$400,000
Less: Variable costs
300,000
200,000
Contribution margin
$100,000
$200,000
Less: Fixed costs
50,000
150,000
Operating income
$ 50,000
$ 50,000
Cut and paste below to help with formatting your final answer.
Required:
1. Calculate the margin of safety in dollars for each firm. (2
marks)
FIRM 1
FIRM 2
MOS=$
MOS=$
DOL=
DOL=
OI=$
OI=$
Rough work if required:
2. Determine the degree of operating leverage for each firm. (2
marks)
Rough work:
3. Determine the operating income for each firm if sales increase
by 20%. (2 marks)
Rough work:
4. Provide valuable comments to management on the differences between the two firms. (4 marks)
Question 3
Which of the following employees would not be classified as indirect labor?
Group of answer choices
Plant Custodian.
Plant security guard.
A line employee that directly produces the product.
An employee that packs products for shipment.

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