Heavener Company Produces and Sells Storage Sheds Required:
1)Compute the Product's Contribution Margin Ratio

Essay

Heavener Company produces and sells storage sheds.Its current sales are $500,000.The company's accountant provided the following cost information: $\begin{array}{|l|l|}\hline \text { Manufacturing costs } & \$ 100,000+40^{\circ} \% \text { of sales } \\\hline \text { Selling costs } & \$ 30,000+10 \% \text { of sales } \\\hline \text { Administrative costs } & \$ 45,000+10 \% \text { of sales } \\\hline\end{array}$ Required:
1)Compute the product's contribution margin ratio.
2)Compute the company's current net income.
3)Compute the product's break-even point in dollars.
4)Compute the amount of revenue necessary to earn $60,000 in profit.
5)Compute the company's current margin of safety ratio.
6)Should the company accept a proposal that increases sales by 20% and total fixed costs by 25%?