Homework Answers
Contribution margin ratio before automation = 111,000/207,000 = 53.6232%
Contribution margin ratio after automation = 157,000/207,000
= 75.8454%
1.
| Breakeven sales before automation (19,000/53.6232%) | 35,432.42 |
|
Breakeven sales after automation (59,000/75.8454%) |
77,789.82 |
2. Dol = Contribution margin/net operating income
| DOL before automation (111,000/92000) | 1.2065 |
| DOL after automation (157,000/98,000) | 1.6020 |
Note that this problem involves lot of rounding off of numbers. Comment if you face any issues
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