Problem 8-1 Performing Basic CVP Analysis (LO1-CCA; LO2-CC6, 7, 10) Stratford Co

Question

Problem 8-1 Performing Basic CVP Analysis (LO1-CCA; LO2-CC6, 7, 10) Stratford Company distributes a lightweight lawn chair that sells for $60 per unit. Variable expenses are $24 per unit, and fixed expenses total $777,600 annually. Required: Answer the following independent questions: 1. What is the product's CM ratio? Contribution margin ratio Break-even point in sales dollars 3. The company estimates that sales will increase by $85,000 during the coming year due to increased demand. By how much should net operating income increase? Increase in operating income

Explanation / Answer

1.

2.

3.

4. a.

b.

5-a.

5-b. No.

6.

Contribution Margin Ratio 60 %

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