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20-15 Calculating Break-Even Point, Degree of Operating Leverage Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation
20-15 Calculating Break-Even Point, Degree of Operating Leverage Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: -. ... . .... Before Automation After Automation Sales revenue $198,000 $198,000 Less: Variable costs 78,000 38,000 Contribution margin $120,000 $160,000 Less: Fixed costs 15,000 58,000 Net operating income $105,000 $102,000 Required: 1. Calculate Lobster Trap's break-even sales dollars before and after automation. 2. Compute Lobster Trap's degree of operating leverage before and after automation. 3. Interpret the meaning of your calculations in requirement 2
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