What is the required level in sales dollars ($) to increase the net operating income by 20%?…

Requirements:

1. Fill in the requirements using excel sheet (use formulas) (10 points)

2. What is the required level in sales dollars ($) to increase the net operating income by 20%?

Could you find the answer using another method?

(10 points)

3. To confirm your answer in (2) increase sales by 40%, what is the impact of this increase on the

profit, explain changes. (10 points)

4. Using the following levels of activity:

Activity Volume (in Units)

10,000

20,000

30,000

40,000

50,000

Draw a diagram for your manager to show the sales and costs in relation to the activity volume

(Breakeven relations). (10 points)

5. Draw the diagram again given that the manager has reduced the variable cost to $24 (write your

thoughts) (10 points)

6. (A) Prepare another worksheet similar to the cells in requirement (1) given that the manager has

increased fixed expenses to $400,000. (5 points)

(B) Compute the margin of safety percentage, explain any change.

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