Activity 005
Activity 005
Activity 005
Assignment #5
1. Aladin Company Manufactures small battery that is used in clocks, toys and some other
electronic devices. The last month’s income statement of Aladin is given below:
Required:
Prepare Aladin's new income statement under each of the following conditions:
1. The sales colume increase by 15%.
2. The selling price decreases by 20% per unit, and the sales volume increase by 30%.
3. The selling price increases by 50% per unit, fixed expenses increase by $20,000 and the sales volume
decreases by 5%.
4. Variable expenses increases by 20% per unit, the selling price increase by 12%, and the sales volume
decrease by 10%.
2. TLK Ltd. manufactures small size fans to be used in load shedding areas. Each fan has a
rechargeable battery and a built in charging circuit. TLK sells a fan for $120. The annual sale is
30,000 fans. Variable and fixed cost data is given below:
Required:
A. Prepare contribution margin income statement and compute the degree of operating leverage.
B. Next year the sales are expected to increase by 7,500 fans. Compute (a) the expected
percentage increase in net operating income (b) expected increase in net operating income and
(c) expected total net operating income for the next year.