Homework Answers
12. Expected Profit And Loss for the period.
| Unit Basis | Percentages | Total Dollars | |
| SP | $ 30/Case | 100% | $ 1,200,000 |
| VC | $ 27/Case | 90% | $ 1,080,000 |
| CM (SP-VC) | $ 3/Case | 10% | $ 120,000 |
| FC |
$ 2.75/cases ($ 110,000/40000 Cases) |
9.17% | $ 110,000 |
| NI | $ 0.25/cases | 0.83% | $ 10,000 |
13. Current Operating Leverage = CM/NI
= $ 120,000/$ 10,000
= 12
Expected Profit And Loss for the period. (If 20% increase in total sales that means sales is 48000/cases now)
| Unit Basis | Percentages | Total Dollars | |
| SP | $ 30/Case | 100% | $ 1,440,000 |
| VC | $ 27/Case | 90% | $ 1,296,000 |
| CM (SP-VC) | $ 3/Case | 10% | $ 144,000 |
| FC |
$ 2.29/cases ($ 110,000/48000 Cases) |
7.64% | $ 110,000 |
| NI | $ 0.71/cases | 2.36% | $ 34,000 |
14.Considering thr formula for "oprating Leverage" if NO fixed costs had existed in the above fact pattern operating leverage would have been Option C i.e. 1.0
Because no fixed cost make NI = CM and will make operating leverage equals to 1.
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