5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of a cycle that was popular in the 1930s. The retro-look cycle would be sold for $17,000 and at that price, Thad estimates 400 units would be sold each year. The variable cost to produce and sell the cycles would be $11,900 per unit. The annual fixed cost would be $1,938,000.
a. What is the break-even in unit sales?
Please could you explain how to calculate the degree of operating leverage? I did a and b but I can't figure out c. Thank you.
Homework Answers
| Answer | |
| (c) | |
| Sales (400 x 17,000) | $ 6,800,000 |
| Less: Variable cost (400 x 11,900) | -$ 4,760,000 |
| Contribution | $ 2,040,000 |
| Less: Fixed cost | -$ 1,938,000 |
| EBIT | $ 102,000 |
| Degree of operating leverage = Contribution margin/EBIT | |
| 2,040,000/102,000 | |
| $20 | |
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5. Thad Morgan, a motorcycle enthusiast, has been exploring the
possibility of relaunching the Western Hombre...
5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre...
5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $14,000 and at that price, Thad estimates 200 units would be sold each year. The variable cost to produce and sell the cycles would be $10,500 per unit. The annual fixed cost would be $560,000. a. What is the break-even in unit sales? b. What is the margin...
Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand...
Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $11,000 and at that price, Thad estimates 600 units would be sold each year. The variable cost to produce and sell the cycles would be $8,250 per unit. The annual fixed cost would be $1,320,000. a. What is the break-even in unit sales? b. What is the margin of...
4. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre...
4. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $13,000 and at that price, Thad estimates 400 units would be sold each year. The variable cost to produce and sell the cycles would be $10,400 per unit. The annual fixed cost would be $988,000. a. What is the break-even in unit sales? b. What is the margin...
Need correct answers please. 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of...
Need correct answers please.
5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $13,000 and at that price. Thad estimates 300 units would be sold each year. The variable cost to produce and sell the cycles would be $9.750 per unit. The annual fixed cost would be $877500 What is the degree of operating leverage? (Round your...
Required information The Chapter 5 Form worksheet is to be used to create your own worksheet...
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4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: 1 Chapter 3: Applying Excel 3 Data 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 48,000 units $40 per unit $16 per unit S720,000 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (loss) (b) By what...
4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet...
4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: 1 Chapter 3: Applying Excel 3 Data 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 48.000 units $40 per unit $16 per unit S720,000 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income loss) 432,000 (b) By...
4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet...
4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: А в с | 1 Chapter 5: Applying Excel 2 3 Data 4 Unit sales 96,000 units Selling price per unit $ 20 per unit 6 Variable expenses per unit $ 8 per unit 7 Fixed expenses $ 480,000 5 selli (a) What is net operating income? (Negative amount should be indicated by a...
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Need correct answers please.
5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $13,000 and at that price. Thad estimates 300 units would be sold each year. The variable cost to produce and sell the cycles would be $9.750 per unit. The annual fixed cost would be $877500 What is the degree of operating leverage? (Round your...
Required information The Chapter 5 Form worksheet is to be used to create your own worksheet version of the Review Problem example in the text. 2. Change all of the numbers in the data area of your worksheet so that it looks like this: Chapter 5: Applying Excel 4 Data Unit sales Selling price per unit Variable expenses per unit Fixed expenses 80,000 units 50 per unit 20 per unit 6 1.800.000 If your formulas are correct, you should get...
4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: 1 Chapter 3: Applying Excel 3 Data 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 48,000 units $40 per unit $16 per unit S720,000 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (loss) (b) By what...
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Chapter 5: Applying Excel Data Unit sales 20,000 units $60 Selling price per unit Variable expenses per unit Fixed expenses per unit $45 per unit $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relations hips Compute the CM ratio and variable expense ratio Selling price per unit Variable expenses per unit Contribution margin per unit ? per unit ? per unit ? per unit CM ratio Variable expense ratio ? Compute...
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