(SOLVED)- Espanola Company produces a single product The projected income statement


Question Description:

$19

Espanola Company produces a single product. The projected income statement for the coming year is as follows:
Sales (50,000 units @ $45) …….. $2,250,000
Total variable cost ………… 1,305,000
Contribution margin ……….. $945,000
Total fixed cost …………. 916,650
Operating income ………… $ 28,350

Required:
1. Compute the break-even sales dollars.
2. Compute the margin of safety in sales dollars.
3. Compute the degree of operating leverage (Note: Round answer to two decimal places).
4. Compute the new operating income if sales are 20 percent higher than expected.

Answer

$19