Degree of operation leverage
Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per unit, and fixed costs are $300,000 per year. Quantity sold is expected to be 15,000 units per year. The new product will require an initial investment of $16 million, depreciation will be straight-line to zero for eight years, and salvage at the end of eight years is expected to be $2 million. Demand for the product is expected to be stable and to continue for eight years. The required rate of return on this new product line is 12%. What is the degree of operating leverage at the expected quantity sold of 15,000 units?
Select one:
Homework Answers
Request Answer!
We need at least 10 more requests to produce the answer.
0 / 10 have requested this problem solution
The more requests, the faster the answer.
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of...
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $ 12,150,000 Total variable cost 7,533,000 Contribution margin $ 4,617,000 Total fixed cost 2,437,776 Operating income $ 2,179,224 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $per unit 1(b). Compute contribution margin per unit. Enter your answer to the nearest...
NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units...
NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $39.00 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $490,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,410,000 and will be depreciated over eight years (straight line). The company tax rate is 35%. What is the...
Shrieves Casting Company is considering adding a new line to its product mix, and the capital...
Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The cost of new machinery for the new product line would be $644,000. The machinery has economic life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the machine. The new line would generate incremental sales of 70,000 units per year at...
P10-14 (similar to) : Question Help NPV. Huffman Systems has forecasted sales for its new home...
P10-14 (similar to) : Question Help NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 60,000 units per year at $37.00 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $490,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,300,000 and will be depreciated over eight years (straight line). The company tax...
1. If a product can be sold for $2,000 per unit, the variable cost per unit...
1. If a product can be sold for $2,000 per unit, the variable cost per unit is $650, and fixed costs are $2 million, how many units must be produced and sold before the firm can break even? 2. If an employee has a salary of $75,000 per year, benefits cost the company $7,200 per employee per year, and the employer's share of the Social Security tax is 7.65 percent, what is the direct cost per year for this employee?...
1a.If a product can be sold for $2,000 per unit and the variable cost per unit...
1a.If a product can be sold for $2,000 per unit and the variable cost per unit is $650, and fixed costs are $2 million, how many units must be produced and sold before the firm can break even? 1b. If an employee has a salary of $75,000 per year, benefits cost the company $7,200 per employee per year, and the employer’s share of the Social Security tax is 7.65 percent, what is the direct cost per year for this employee?...
Barbour Electric is considering the introduction of a new product. This product can be produced in...
Barbour Electric is considering the introduction of a new product. This product can be produced in one of several ways: (a) using the present assembly line at a cost of $25 per unit, (b) using the current assembly line after it has been overhauled (at a cost of $10,000) with a cost of $12 per unit; and (c) on an entirely new assembly line (costing $30,000) designed especially for the new product with a per unit cost of $20. Barbour...
Break Even Units, Contribution Margin Ratio, Multiple Product Breakeven, Margin of Safety, Degree of Operating Leverage...
Break Even Units, Contribution Margin Ratio, Multiple Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $9,000,000 Total variable cost 6,030,000 Contribution margin $ 2,970,000 Total fixed cost 1.898,820 Operating income $ 1,071,180 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. S per unit 1(b), Compute contribution margin per unit. Enter your answer to...
Break-Even in Units, Target Income, New Unit Variable Cost, Degree of Operating Leverage, Percent Change in...
Break-Even in Units, Target Income, New Unit Variable Cost, Degree of Operating Leverage, Percent Change in Operating Income Reagan, Inc., has developed a chew-proof dog bed—the Tuff-Pup. Fixed costs are $208,000 per year. The average price for the Tuff-Pup is $36, and the average variable cost is $23 per unit. Currently, Reagan produces and sells 20,000 Tuff-Pups annually. Required: 1. How many Tuff-Pups must be sold to break even? units 2. If Reagan wants to earn $71,500 in profit, how...
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $39.00 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $490,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,410,000 and will be depreciated over eight years (straight line). The company tax rate is 35%. What is the...
P10-14 (similar to) : Question Help NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 60,000 units per year at $37.00 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $490,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,300,000 and will be depreciated over eight years (straight line). The company tax...
1. If a product can be sold for $2,000 per unit, the variable cost per unit is $650, and fixed costs are $2 million, how many units must be produced and sold before the firm can break even? 2. If an employee has a salary of $75,000 per year, benefits cost the company $7,200 per employee per year, and the employer's share of the Social Security tax is 7.65 percent, what is the direct cost per year for this employee?...
Barbour Electric is considering the introduction of a new product. This product can be produced in one of several ways: (a) using the present assembly line at a cost of $25 per unit, (b) using the current assembly line after it has been overhauled (at a cost of $10,000) with a cost of $12 per unit; and (c) on an entirely new assembly line (costing $30,000) designed especially for the new product with a per unit cost of $20. Barbour...
Break Even Units, Contribution Margin Ratio, Multiple Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $9,000,000 Total variable cost 6,030,000 Contribution margin $ 2,970,000 Total fixed cost 1.898,820 Operating income $ 1,071,180 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. S per unit 1(b), Compute contribution margin per unit. Enter your answer to...
Most questions answered within 3 hours.
-
Suppose a car is traveling at +22.2 m/s, and the driver sees a
traffic light turn...
asked 2 minutes ago -
1) Write a method that will return the length of smallest string
in an array of...
asked 10 minutes ago -
I am currently taking a Foundation of Programming course where
we are being taught Java. We...
asked 13 minutes ago -
Select one of the following WSJ articles and apply the type
concepts from producers and users...
asked 28 minutes ago -
Make sure you are able to describe the 3 primary goals of
seating interventions.
asked 33 minutes ago -
How does microfiltration work in industrial milk processing? is
it through pump or is it through...
asked 33 minutes ago -
A spy satellite is in circular orbit around Earth. It makes one
revolution in 7.20 h....
asked 33 minutes ago -
When sending an email from one RMU email account to another RMU
email account, the email...
asked 34 minutes ago -
When 10.0 mg of sucrose is dissolved in enough water to make
100.0 mL of solution...
asked 53 minutes ago -
I have volunteered at a butterfly garden and I am supposed to
write a journal reflection...
asked 1 hour ago -
10 Distributions of GNU Linux
10 Distributions
5 different operating Systems
What is the exact function...
asked 58 minutes ago -
Two point charges are fixed on the y axis: a negative point
charge q1 = -33...
asked 1 hour ago