1.
Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and fixed expenses were $45,000.
a.
b.
Estimate the change in the company’s net operating income if it were to increase its total sales by $1,500.
Required: 

What is the company’s contribution margin (CM) ratio? 
2. [The following information applies to the questions displayed below.]
Maxson Products distributes a single product, a woven basket whose selling price is $8 and whose variable cost is $6 per unit. The company’s monthly fixed expense is $5,500.Required:a.Compute for the company’s breakeven point in unit sales using the equation method.b. Compute for the company’s breakeven point in sales dollars using the equation method and the CM ratio. (Do not round intermediate calculations. Round your CM ratio to 2 decimal places.) CM ratio______________________ Breakeven point in dollar sales________________________________
4. Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budget appear below: 
per unit
Selling price 
$25 
per unit 

Variable expenses 
$15 

Fixed expenses 
$8,500 
per month 

Unit sales 
1,000 
units per month 
Required:a.
Compute the company’s margin of safety. 
b. Compute the company’s margin of safety as a percentage of its sales. (%)