Vaughn Hospital is contemplating an investment in an automated surgical system. Its current process relies on...
Vaughn Hospital is contemplating an investment in an automated
surgical system. Its current process relies on the a number of
skilled physicians. The new equipment would employ a computer
robotic system operated by a technician. The company requested an
analysis of the old technology versus the new technology. The
accounting department has prepared the following CVP income
statements for use in your analysis.
|
Old |
New |
|||
| Sales | $3,197,000 | $3,197,000 | ||
| Variable costs | 1,587,800 | 682,700 | ||
| Contribution margin | 1,609,200 | 2,514,300 | ||
| Fixed costs | 1,162,200 | 1,936,300 | ||
| Net income | $447,000 | $578,000 |
(a)
Compute the degree of operating leverage for the company under each
scenario. (Round answers to 2 decimal places, e.g.
15.72.)
|
Degree of operating leverage |
||
| Old |
|
|
| New |
|
Homework Answers
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Vaughn Hospital is contemplating an investment in an automated surgical system. Its current process relies on...
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Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on the a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The company requested an analysis of the old technology versus the new technology. The accounting department has prepared the following CVP income statements for use in your analysis. Old New Sales $3,153,000 $3,153,000 Variable costs 1,582,200 712,800 Contribution margin 1,570,800 2,440,200 Fixed costs 1,108,800 1,859,200...
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Question 3 Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Sales Variable...
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Casas Modernas ofJuarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez Casas owner is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year Shown below are CVP income statements for each alternative. Manual Computerized Sales Variable costs Contribution margin...
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Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Computerized System Sales Variable...
Question 3 Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Sales Variable...
Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Computerized System Sales Variable...
Exercise 6-15 Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Manual System Sales Variable...
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