operating leverage ration of 5. A companies sales inclrease by 8%, what is the change in...
Homework Answers
% change in profit = Operating leverage * % change in sales
= 5 * 0.08
= 40%
Hence profit increases by 40%
Correct choice C
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operating leverage ration of 5. A companies sales inclrease by 8%,
what is the change in...
What is Current Ration, Leverage, and Inventory turnover in companies financial report?
What is Current Ration, Leverage, and Inventory turnover in companies financial report?
a) Degree of operating leverage = Contribution margin / profit Degree of operating leverage = 15,600,000...
a) Degree of operating leverage = Contribution margin / profit Degree of operating leverage = 15,600,000 / 6,000,000 = 1.625 Sales = 1200000 x 24 = 28800000 Less: Variable cost = 1200000 x 11 = 13200000 Contribution Margin = 28800000 - 13200000 = 15,600,000 Less: Fixed cost = 9,600,000 Profit = 15600000-9600000 = 6000000 b) Break even units Contribution margin per unit = Selling price - variable cost = $24 - $11 = $13 Break even units = Fixed cost...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: $ 14.71 Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month 2.24 1.14 0.16 $4,914.80 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.) a. Sales price increases by $2.10 per cake. Break-Even Point...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month $ 14.11 2.30 1.14 0.22 $4,493.50 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.) a. Sales price increases by $1.20 per cake. Break-Even Point...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point? Problem: Oslo Company prepared...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point? Problem: Oslo Company prepared...
please answer all questions Questions: 1. What is the meaning of contribution margin ration? How is...
please answer all questions
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point?...
5. Given the following information, what is the degree of operating leverage? Sales: 100 Variable costs:...
5. Given the following information, what is the degree of operating leverage? Sales: 100 Variable costs: 20 Fixed costs:30 6. Given the info above, if sales change 20% how much will operating income change? 7. If the company has $900 in sales and $1,030 in sales in year 2, then operating income will change by what percentage if the DOL is 10?
13. You are the manager of a project that has a 2.8 degree of operating leverage...
13. You are the manager of a project that has a 2.8 degree of operating leverage and a required return of 14 percent. Due to the current state of the economy, you expect sales to decrease by 7 percent next year. What change should you expect in the operating cash flows next year given your sales prediction? A 19.60 percent . decrease В 16.03 percent decrease C 13.46 percent decrease D 5.60 percent . decrease
Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc....
Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. Sales $500,000 $625,000 Less: Variable costs 250,000 125,000 Contribution margin $250,000 $500,000 Less: Fixed costs 200,000 450,000 Operating income $50,000 $50,000 Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company. Trimax, Inc. $ Quintex, Inc. $ Why is the break-even point for Quintex, Inc., higher? 3. Suppose...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: $ 14.71 Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month 2.24 1.14 0.16 $4,914.80 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.) a. Sales price increases by $2.10 per cake. Break-Even Point...
E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month $ 14.11 2.30 1.14 0.22 $4,493.50 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.) a. Sales price increases by $1.20 per cake. Break-Even Point...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point? Problem: Oslo Company prepared...
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point? Problem: Oslo Company prepared...
please answer all questions
Questions: 1. What is the meaning of contribution margin ration? How is this ratio useful in planning business operations? 2. In all respects, Company A and Company B are identical except that Company A's costs are mostly variable whereas Company B's costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain. 3. What is the meaning of operating leverage? 4. What is the meaning of break-even point?...
13. You are the manager of a project that has a 2.8 degree of operating leverage and a required return of 14 percent. Due to the current state of the economy, you expect sales to decrease by 7 percent next year. What change should you expect in the operating cash flows next year given your sales prediction? A 19.60 percent . decrease В 16.03 percent decrease C 13.46 percent decrease D 5.60 percent . decrease
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