Student Name: Marcie DeGiovine Class: BA511 6/1 - 9/30/2013 Problem 6-19 MEMOFAX, INC. 1.

Contribution margin ratio: Sales Variable expenses Contribution margin Break-even point: Sales Variable expense Fixed expense Profits Break-even point (units) Break-even point (dollars) Alternative break-even point calculation: Break-even point (units) Break-even point (dollars) 2. Incremental contribution margin: Increased sales Less increase advertising cost Increase in monthly net income Current loss per month Add increase Total income per month 3. Sales Variable expenses Contribution margin Fixed expenses Net loss Units sold to reach target profit: Sales Variable expenses Fixed expenses Profits Number of units Alternative calculation: Number of units Percent Total Per Unit of Sales $270,000 $20 100% 189,000 14 70% $81,000 $6 30%

$300,000 210,000 90,000 0 15,000 Correct! $300,000 Correct!

15,000 Correct! $300,000 Correct!

$70,000 8,000 $13,000 Correct! ($9,000) 13,000 $4,000 $486,000 378,000 108,000 125,000 ($17,000) Correct!

4.

$350,000.00 245,000.00 90,000 4,500 17,500 Correct!

17,500 Correct!

Student Name: Marcie DeGiovine Class: BA511 6/1 - 9/30/2013 Problem 6-19 5a. Contribution margin ratio: Sales Variable expenses Contribution margin Break-even point: Fixed expense Unit contribution margin Break-even point in unit sales Contribution margin ratio Break-even point in sales dollars 5b. Comparative income statements: Sales Variable expenses Contribution margin Fixed expenses Net income Percent of Sales $20 100% 7 35% $13 65% Correct! Correct! $208,000 13 16,000 Correct! 65% $320,000 Correct! Not Automated Total Per Unit $400,000 $20 280,000 14 120,000 $6 90,000 $30,000 Correct! Automated % Total Per Unit % 100% $400,000 $20 100% 70% 140,000 7 35% 30% 260,000 $13 65% 208,000 $52,000 Correct!

Per Unit

Given Data P06-19: MEMOFAX, INC. Information from recent month's income statement: Sales Units sold Sales price per unit Variable expenses Contribution margin Fixed expenses Net operating loss Information for Part 2: Increase in monthly advertising budget Increase in monthly sales Information for Part 3: Reduction in selling price Increase in monthly advertising budget Increase in monthly unit sales Information for Part 4: Increase in packaging cost per unit Targeted profit each month Information for Part 5: Reduction in variable costs per unit Increase in monthly fixed costs Expected sales in units Check figures: (1) Breakeven (units) (4) Units $270,000 13,500 $20 189,000 81,000 90,000 ($9,000)

$8,000 70,000

10% $35,000 200%

$0.60 45,000

1/2 118,000 20,000

$15,000 17,500