Homework Answers
Answer : (a)Calculation of Fixed Operating Cost
Break Even Point = Fixed Operating Cost / (Selling price per unit - Variable Cost per unit)
3500 = Fixed Operating Cost / (25 - 16)
==> Fixed Operating Cost = 3500 * 9
= $31500
(b.) Below is the table showing calculation of EBIT when company produces 5000 units
| Working | Amount | |
| Sales (A) | 5000 * 25 | 125,000 |
| Variable Operating Cost (B) | 5000 * 16 | 80,000 |
| Contribution (C) | (A) - (B) | 45000 |
| Fixed Cost (D) | 31500 | |
| EBIT | (C) - (D) | 13500 |
(c.) Calculation of Operating Leverage
Operating Leverage = Contribution / EBIT
| Working | Amount | |
| Sales (A) | 6000 * 25 | 150,000 |
| Variable Operating Cost (B) | 6000 * 16 | 96,000 |
| Contribution (C) | (A) - (B) | 54,000 |
| Fixed Cost (D) | 31500 | |
| EBIT | (C)-(D) | 22500 |
Operating Leverage = 54000 / 22500
= 2.4
Add Answer to:
1. Lens Company has variable operating cost of $16 per unit and sell price of $25...
1. Lens Company has variable operating cost of $16 per unit and sell price of $25...
1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.
1. Lens Company has variable operating cost of $16 per unit and sell price of $25...
1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.
2. ABC Company has variable operating cost of $15 per unit and sell price of $25...
2. ABC Company has variable operating cost of $15 per unit and sell price of $25 per unit if company's operating break-even point is 3000 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 4000 units.
Lens Company has variable operating cost of 16 per unit Each of the following question is...
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1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.
1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.
2. ABC Company has variable operating cost of $15 per unit and sell price of $25 per unit if company's operating break-even point is 3000 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 4000 units.
Lens Company has variable operating cost of 16 per unit
Each of the following question is accounted 10 points. Please show the deta work in order to get full credits. 1. Lens Company has variable operating cost of $16 per unit and sell pri of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage...
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8.What is the break-even point in unit sales?
9.What is the break-even point in dollar sales?
10.How many units must be sold to achieve a target profit of
$8,400?
11.What is the margin of safety in dollars?
12.What is the margin of safety percentage?
13.What is the degree of operating leverage?...
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