Question : 7.The Gaylord Company has sales of $800,000, variable costs of : 1416293

 

7.The Gaylord Company has sales of $800,000, variable costs of $400,000, and fixed costs of $250,000.

 

Compute the following:

a.Contribution margin ratio

b.Break-even sales volume

c.Margin of safety ratio

d.Net income as a percentage of sales

8.Sherpa Manufacturing has the following income statement for 6,000 units:

 

Sales$600,000

Variable costs360,000

Contribution margin240,000

Fixed costs80,000

Net income$160,000

 

(a)At what sales volume (in sales dollars) does Sherpa break even?

(b)At what sales volume (in units) does Sherpa break even?

(c)Given the income statement above, compute the margin of safety.

(d)What level of sales volume must be attained to reach net income of $200,000?

(e)What level of sales volume must be attained to reach net income of $180,000, assuming Sherpa had to pay income taxes at a rate of 40%?