Homework Answers
Answer) False
Formula to calculate the degree of operating leverage(DOL) is given below,
Degree of operating leverage = changes operating income/change in sales
Degree of operating leverage = contribution margin/operating income
Degree of operating leverage = contribution margin percentage/operating margin
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Based on the example in the textbook, the calculation below is of a conservative firm. $24,000...
Carver Packing Company reports total contribution margin of $72.000 and pretax net income of $24,000 for...
Carver Packing Company reports total contribution margin of $72.000 and pretax net income of $24,000 for the current month. In the next month, the company expects sales volume to increase by 8%. The degree of operating leverage and the expected percent change in income, respectively, are: Multiple Choice O 3.0 and 8% 3.0 and 24% O 0.33 and 8% 0.33 and 2.7% O 4.0 and 32% Alvarez Company's break-even point in units is 1,700. The sales price per unit is...
Derst Incorporated sells a particular textbook for $25. Variable expenses are $13 per book. At the...
Derst Incorporated sells a particular textbook for $25. Variable expenses are $13 per book. At the current volume of 42,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total: Multiple Choice $546,000 $1,050,000 $504,000 $1,554,000 Bristo Corporation has sales of 1,600 units at $50 per unit. Variable expenses are 35% of the selling price. If total fixed expenses are $42,000, the degree of operating leverage is: Multiple...
Please show the calculation! Thank you. Required information [The following information applies to the questions displayed...
Please show the calculation! Thank you.
Required information [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 300 units 2,600 units 1,100 units @ @ @ $15 $20 $21 During 2018, Parvin sold 3,400 units of inventory at $43 per unit and incurred $16,300 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO....
(The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below:...
(The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 125 80 Percent of Sales 100% 64 36% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. 2-a. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $5 per unit and increase unit sales by 20%....
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix...
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix Price Cost 60,000 units $40 S20 40,000 units 60 30 20,000 units 30 5 If the firm can change the sales mix from 60,000 P, 40,000 Q, and 20,000 R to 60,000 P, 20,000 Q, and 40,000 R, pre-tax income will be a) Lower b) Higher c) Unchanged d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for multiple products....
The following is Alsatian Corporation’s contribution format income statement from last month: Sales(2000 units x $70) $140,000 Less: Variable Costs 84,000 Contribution Margin 56,000 Less: Fixed Expenses 24,000 Operating In
The following is Alsatian Corporation’s contribution format income statement from last month: Sales(2000 units x $70) $140,000 Less: Variable Costs 84,000Contribution Margin 56,000Less: Fixed Expenses 24,000Operating Income $32,000The company has no beginning or ending inventories and produced and sold 2,000 units during the month. Required:A/ What is the company’s break-even sales in $(2) B/ If the sales volume increases by 10% and variable costs/unit decreases by $2.00, what will the new operating income be? Produce a...
QUESTION 11 Assume that your investment decision for 2372-2374 is based on a net present value...
QUESTION 11 Assume that your investment decision for 2372-2374 is based on a net present value calculation. You will only go ahead with the investment if the Net Present Value calculation is positive. Your Net Operating Income over the next 25 years must be positive. The discount rate you will use is 24%. The purchase price is $4,500,000. You will sell the property at the end of year 25 for $6 million. After a detailed analysis you project the following...
Help Save & Sub Cobe Company has already manufactured 24,000 units of Product A at a...
Help Save & Sub Cobe Company has already manufactured 24,000 units of Product A at a cost of $15 per unit. The 24,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a S210,000 total additional cost and be converted into 5 200 units of Product B and 11,400 units of Product C. Per unit selling price for Product B is $108 and for Product C is $58. 1. Prepare an analysis...
Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for...
Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October: Sales revenue (340 units @ $620 per unit) $ 210,800 Less Manufacturing costs Variable costs 26,000 Depreciation (fixed) 27,700 Marketing and administrative costs Fixed costs (cash) 67,300 Depreciation (fixed) 22,200 Total costs $ 143,200 Operating profits $ 67,600 Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are...
Required: 1. Prepare a contribution format income statement for the month based on actual sales data....
Required:
1. Prepare a contribution format income
statement for the month based on actual sales data. (Round
your percentage answers to the nearest whole number.)
Problem 4-20 Sales Mix; Multi-Product Break-Even Analysis (L09] Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products—sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Units 600...
Carver Packing Company reports total contribution margin of $72.000 and pretax net income of $24,000 for the current month. In the next month, the company expects sales volume to increase by 8%. The degree of operating leverage and the expected percent change in income, respectively, are: Multiple Choice O 3.0 and 8% 3.0 and 24% O 0.33 and 8% 0.33 and 2.7% O 4.0 and 32% Alvarez Company's break-even point in units is 1,700. The sales price per unit is...
Derst Incorporated sells a particular textbook for $25. Variable expenses are $13 per book. At the current volume of 42,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total: Multiple Choice $546,000 $1,050,000 $504,000 $1,554,000 Bristo Corporation has sales of 1,600 units at $50 per unit. Variable expenses are 35% of the selling price. If total fixed expenses are $42,000, the degree of operating leverage is: Multiple...
Please show the calculation! Thank you.
Required information [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 300 units 2,600 units 1,100 units @ @ @ $15 $20 $21 During 2018, Parvin sold 3,400 units of inventory at $43 per unit and incurred $16,300 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO....
(The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 125 80 Percent of Sales 100% 64 36% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. 2-a. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $5 per unit and increase unit sales by 20%....
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix Price Cost 60,000 units $40 S20 40,000 units 60 30 20,000 units 30 5 If the firm can change the sales mix from 60,000 P, 40,000 Q, and 20,000 R to 60,000 P, 20,000 Q, and 40,000 R, pre-tax income will be a) Lower b) Higher c) Unchanged d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for multiple products....
Help Save & Sub Cobe Company has already manufactured 24,000 units of Product A at a cost of $15 per unit. The 24,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a S210,000 total additional cost and be converted into 5 200 units of Product B and 11,400 units of Product C. Per unit selling price for Product B is $108 and for Product C is $58. 1. Prepare an analysis...
Required:
1. Prepare a contribution format income
statement for the month based on actual sales data. (Round
your percentage answers to the nearest whole number.)
Problem 4-20 Sales Mix; Multi-Product Break-Even Analysis (L09] Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products—sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Units 600...
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