Ehrlich Enterprises prepared the following contribution format income statement based on a sales volume of 3,000 units (the relevant range of production is 1,000 units to 5,000 units): Contribution...

Ehrlich Enterprises prepared the following contribution format income statement based on a sales volume of 3,000 units (the relevant range of production is 1,000 units to 5,000 units):

Required: Show all calculations!

(Answer each question independently and always refer to the original data unless instructed otherwise. Round all uneven answers to 2 decimal places.)

1. What is the contribution margin per unit?


2. What is the contribution margin ratio?


3. What is the variable expense ratio?


4. If sales decline to 1,300 units, what would be the net operating income (loss)?


5. If the selling price increases by $3 per unit and the sales volume decreases by 100 units, what would be the net operating income?


6. What is the break-even point in unit sales?


7. What is the break-even point in dollar sales?


8. How many units must be sold to achieve a target profit of $7,000?


9. What is the margin of safety in dollars?


10. If fixed costs increase by 12%, what will be the new breakeven point in units?


11. What is the degree of operating leverage?


12. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?