Following is thecontribution margin income statementof a single product company:TotalPer unit

Sales$1,200,000$80

Less variable expenses$840,000$56

-

Contribution margin360,000$24

Less fixed expenses300,000-

Net operating income$60,000

Required:1. Calculate break-even point in units and dollars.2. What is the contribution margin at break-even point?3. Compute the number of units to be sold to earn a profit of $36,000.4. Compute themargin of safetyusing original data.5. Compute CM ratio. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change.

Metro International manufactures two products plasma TV and high quality laptop. Plasma TV sells for $800 and high quality laptop for $1200. Company sells its products through its own stores and other outlets. Total fixed expenses of Metro International are $132,000 per month. Variable expenses and monthly sales data are given below:Plasma TVLaptop

Variable expenses per unit$480$240

Monthly sales in units200 Units80 Units

Required:1. Prepare acontribution marginformat income statement showing dollars and percent columns for products and for the company as a whole.2. Compute the break-even point in dollars andmargin of safety.3. Metro International is considering to manufacture another product an inverter. The addition of new product will not effect the fixed cost of the company. The variable expenses to manufacture and sell an inverter will be $1,200. If the new product is sold for $1,600 the monthly expected sales are 40 inverters.(a). Prepare a newcontribution margin income statement.(b). Compute the new break-even point and margin of safety of the company.4. The president is unable to understand the increase in break-even sales because the new product has increased the sales revenue and contribution margin without any increase in fixed costs. Explain to the president the reason of increase in break-even sales.

PNG electric company manufactures a number of electric products. Rechargeable light is one of the PNGs products that sells for $180/unit. Total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. Monthly sales are 8,000 rechargeable lights.Required:1. Compute break-even point of the company in dollars and units.2. According to a research conducted by sales department, a 10% reduction in sales price will result in 25% increase in unit sale. Prepare two income statements incontribution marginformat, one using the current price and one using proposed price (10% below the old sales price).3. Compute the number of rechargeable lights to be sold to earn a net operating income of $144,000 per month.

Zoltrixound company manufactures high quality speakers for desktop and laptop computers. Last month Zoltrixound suffered a loss of $18,000. The income statement of the last month is as follows:Sales (13,500 units $40)540,000

Less variable expenses378,000

Contribution margin162,000

Less fixed expenses180,000

Net operating loss$(18,000)

Required:1. Compute the break-even point andcontribution margin ratioof Zoltrixound company?2. Sales department feels that if monthly advertising budget is increased by $16000, the sales will be increased by $140,000. Show the effect of this change.3. If sales price is reduced by 20% and monthly advertising expenses are increased by $70,000, the unit sales are expected to increase by 100%. Show the effect of this change by preparing a new income statement of Zoltrixound company.4. The Zoltrixound wants to make the packing of its product more attractive. The new packing would increase cost by $1.20 per unit. Assuming no other changes, compute the number of units to be sold to earn a net operating income of $9,000.5. The company is planning to purchase a new machine. The installation of new machine will increase fixed cost by $236,000 and decrease unit variable expenses by 50%.(a). Compute the CM ratio and break-even point if the new machine is installed.(b). Company expects a sale of 20,000 units for the next month. Prepare two income statement, one assuming that the machine is not installed and one assuming that it is installed.(c) Should the company install new machine. Give your recommendations.