Question

1. Given the graphs above, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B's fixed costs are $120,000, its variable costs per unit are $4, and its sales price is $8 per unit. Round your answers to the nearest cent.
   Fixed costs: $   
   Variable costs per unit: $   
   Sales price per unit: $  

2. Which firm has the higher operating leverage at any given level of sales?
   A or B

3. At what sales level, in units, do both firms earn the same operating profit? Round your answer to the nearest whole number.
   _____ units

> how did you get the 21.053 and 178.947?

Answer 1

ACCOUNTS latest - Microsoft Excel (Product Activation Failed) View Add-Ins - 2x Σ AutoSum : A Dr General Wrap Text Merge & Center $ - % 8. Fill 2 Clear Formatting as Table Styles Styles File Home Insert Page Layout Formulas Data Review % Cut Calibri -11AA = = = Ea Copy Paste Format Painter B I U D A E Clipboard Font FP171 - for FL FM EN FO 171 Sort & Filter Editing Find & Select Alignment Number Cells F P FQ FR FS FT FUFV EWE 172 173 BREAK EVEN POINT (UNITS) = FIXED COSTS/(SELLING PRICE - VARIABLE COST) 21.053= 80/contribution contribution = 80/21.053 contribution = 3.800 per unit 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 revenue at breakeven point = less : fixed cost variable cost = 178.947 80 given in the graph 98.947 variable cost per unit = selling price per unit = 98.947/21.053 178.947/21.053 4.70 8.50 higher the fixed cost, higher the operating leverage firm B ans 189 FIFO CASH BUDGET ferences budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont DIFF ANALYSIS Ovel BOU 130% Rea -_ 0 ODER 9 * * *8 ENG 31-10-2019

ACCOUNTS latest - Microsoft Excel (Product Activation Failed) View Add-Ins File Home Insert Page Layout Formulas Data Review - 2x % Cut 11 Dr General AA = = = A Wrap Text Merge Merge & Center - Center SF $ % % 4:0 .00 8. Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Find & Select Alignment Number Cells Calibri E Copy Paste Format Painter B I Clipboard FR189 FL EM 189 190 U - D Font Fax EN F O FQ FR FS FT FU F V FW UNITS WHERE OPERATING PROFITS ARE SAME 191 192 193 194 (CONTRIBUTION - FIXED COST) FOR FIRM A = (CONTRIBUTION - FIXED COST) FOR FIRM B 3.80(X) -80000 = 4(X) - 120000 40000 = 0.20 (X) X = 200000 units 195 ans 196 197 198 199 200 ANSWERS 201 FIXED COST VARIABLE COST SELLING PRICE 80000 4.70 8.50 HIGHER OPERATING LEVERAGE FIRM B 202 203 204 205 206 207 ► Rea OPERATING PROFIT SAME AT 200000 UNITS FIFO CASH BUDGET ferences budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont DIFF ANALYSIS ovel BOU 130% -_ 0 DEB * ENG NO WAS 31-10-2019