Question

UP Forklifts sells two products, large forklifts and small forklifts. A large forklift sells for $80,000 per unit with variable costs of $20,000 per unit. Small forklifts sell for $55,000 per unit with variable costs of $12,000 per unit. Total fixed costs for the company are $4,252,500. UP Forklifts typically sells one large forklift for every three smalls. What is the breakeven point in total units? 83 units o 22 units 43 units 90 units Question 16 1 pts Shine Bright Lamps has variable expenses of 30% of sales and monthly fixed expenses of $140,000. The monthly target operating income is $60,000. What is Shine Bright Lamps'operating leverage factor at the target level of operating income? O 3.00 3.33 2.33 0.30

Answer 1

15.

	Large Forklifts	Small Forklifts	Total
Selling price per unit	80,000	55,000
Variable cost per unit	-20,000	-12,000
Contribution margin per unit (A)	60,000	43,000
Sales mix (B)	0.25	0.75
Weighted average contribution margin per unit(A x B)	15,000	32,250	47,250

Break even point total units = Fixed costs/Weighted average contribution margin per unit

= 4,252,500/47,250

= 90 units

Fourth option is correct.

16.

Variable expense = 30% of sales

Contribution margin ratio = 70%

Fixed costs = $140,000

Target operating income = $60,000

Sales to get target income = (Fixed cost + Target operating income)/Contribution margin ratio

= (140,000+60,000)/70%

= $285,714

Contribution margin = Sales x Contribution margin ratio

= 285,714 x 70%

= $200,000

Operating leverage = Contribution margin / Operating income

= 200,000/60,000

= 3.33

Second option is correct.

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