18oz Total Z Madison Corp Madison Corp makes 24oz and 18oz sports water bottles. Assume monthly sales amount to 4,000 (24oz) and 5,000 (180z) bottles respectively. 24oz 18oz A. Calculate the Operating Leverage Ratio Sales price per bottle $10 $8 24oz Variable cost per bottle $5 $3 Monthly Unit Sales Y Fixed costs per month $12,000 Selling Price per Unit S S Sales $ $ Variable Costs $ $ A. Calculate the Operating Leverage Ratio Contribution Margin $ $ Fixed Costs B. Calculate the before-tax income if sales increase by 20% Before-tax Profit S $ $ $ IS % Contr. Margin as a % of Sales C. Calculate the before-tax income if sales decrease by 25% D. Calculate the break-even point (Dollar Sales) Operating Leverage Ratio = Contribution Margin Before-tax profit = $ / $ 1.xxxx What does this tell us? Generic/Total B. Calculate the before-tax income if sales increase by 20% % 20% x 1.xxxx = xx.xx% increase % above x $ (prior B4 Tax Profit) = $ increase New Improved Before-tax Income = $ $ (prior + increase ) Check Sales $ Var. Costs $ Cont. Margir $ Fixed Costs $ B4Tax Profit $ C. Calculate the before-tax income if sales decrease by 25% 25% x 1.xxxx = xx.xx% decrease % above x $ (prior B$ Tax Profit) = $ decrease Revised Before-tax Income = $ $ (prior - decrease ) Check Sales $ Var. Costs $ Cont. Margir $ Fixed Costs $ B4Tax Profits D. Calculate the break-even point Break-even point = Fixed Cost Unit Contribution Margin = $ ($ / $ ) = $ Check Sales $ $ Var. Costs $ $ Cont. Margir $ Fixed Costs $ B4Tax Profit $