Spencer Company's Most Recent Monthly Contribution Format Income Statement Is

Spencer Company's most recent monthly contribution format income statement is given below:
$\begin{array}{|l|r|}\hline \text { Sales } & \$ 60,000 \\\hline \text { Less: variable expenses } & \underline{45,000} \\\hline \text { Contribution margin } & 15,000 \\\hline \text { Less: fixed expenses } & 18,000 \\\hline \text { Operating income } & (\$ 3,000) \\\hline\end{array}$
The company sells its only product for $10 per unit.There were no beginning or ending inventories.
Required:
a)What is the company's contribution margin ratio?
b)What are total sales in dollars at the break-even point?
c)What are total variable expenses at the break-even point?
d)If unit sales were increased by 10% and fixed expenses were reduced by $2,000,what would be the company's expected operating income? (Prepare a new income statement.)

Correct Answer:

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a)The contribution margin ratio is $15,0...

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