Homework Answers
Contribution Margin ratio
Before automation = 120,000/198,000 = 60.6061%
After automation = 160,000/198,000 = 80.8081%
Breakeven sales = Fixed cost/Contribution margin ratio
1.
|
Breakeven before automation = 15,000/60.6061% |
24,749.98 |
|
Breakeven after automation = 58,000/80.8081% |
71,774.98 |
Degree of operating leverage = Contribution margin/Net income
|
DOL before automation = 120,000/105,000 |
1.1429 |
|
DOL after automation = 160,000/102,000 |
1.5686 |
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