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Titus Comp. produces lamps and mirrors. The company’s external income statements for the last two years are given below: 2012 2013 2014? Units Sold 145,000 185,000 Sales Revenue $ 2,160,000 $ 2,700,000 Cost of Goods Sold 1,358,000 1,718,000 Gross Margin 802,000 982,000 S, G & A 210,000 210,000 Net Operating Income $ 592,000 $ 772,000 The company has no beginning or ending inventories. Manufacturing costs are mixed, whileS,G&A costs are strictly fixed. Required: 1. Use the “high-low” method to estimate the variable manufacturing cost per unit and thetotal fixed manufacturing cost. Variable Mfg. cost per unit (2 points) = Total Fixed Mfg. costs (2 points) = 2. How much total contribution margin was earned in 2012 year (3 points)? 3. What was the degree of operating leverage in 2013 (3 points)? 4. If sales increase by 10% from 2013 to 2014, how much net operating income will thecompany earn in 2014 (2 points)? 5. Assume that total assets decreased from $15,000,000 to $10,000,000 during 2013. Thecompany’s minimum acceptable rate of return is 5%. Compute the following for 2013 (4points): Return on Sales = Investment Turnover = Return on Investment =

Titus Comp. produces lamps and mirrors. The company’s external income statements for the last two years are given below:
2012 2013 2014?
Units Sold 145,000 185,000
Sales Revenue $ 2,160,000 $ 2,700,000
Cost of Goods Sold 1,358,000 1,718,000
Gross Margin 802,000 982,000
S, G & A 210,000 210,000
Net Operating Income $ 592,000 $ 772,000

The company has no beginning or ending inventories. Manufacturing costs are mixed, whileS,G&A costs are strictly fixed.
Required:
1. Use the “high-low” method to estimate the variable manufacturing cost per unit and thetotal fixed manufacturing cost.
Variable Mfg. cost per unit (2 points) =
Total Fixed Mfg. costs (2 points) =

2. How much total contribution margin was earned in 2012 year (3 points)?
3. What was the degree of operating leverage in 2013 (3 points)?
4. If sales increase by 10% from 2013 to 2014, how much net operating income will thecompany earn in 2014 (2 points)?

5. Assume that total assets decreased from $15,000,000 to $10,000,000 during 2013. Thecompany’s minimum acceptable rate of return is 5%. Compute the following for 2013 (4points):

Return on Sales =
Investment Turnover =
Return on Investment =

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