MathTot sells a learning system that helps preschool and ele…
MathTot sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company’s income statement from last month is as follows: Required a. What is MathTot s contribution margin ratio? Its variable cost ratio? b. What is MathTot s margin of safety? c. If MathTot s sales were to increase by $100,000 with no change in fixed expenses, by how much would operating income increase? d. MathTot s managers have determined that variable costs per unit will increase by 16% beginning next month. To offset this increase in costs, they are considering a 10% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems MathTot sells. What will be MathTot s expected operating income if the price increase isimplemented?
