Question
A furniture manufacturer specializes in wood tables. The tables sell for $220 and incur $110 in variable costs. The company has $18,700 in fixed costs
A furniture manufacturer specializes in wood tables. The tables sell for $220 and incur $110 in variable costs. The company has $18,700 in fixed costs per month. Expected sales are 245 tables per month.
17. | Calculate the margin of safety in units. |
18. | Determine the degree of operating leverage. Use expected sales. |
The company begins manufacturing wood chairs to match the tables. Chairs sell for $44 each and have variable costs of $20. The new production process increases fixed costs to $20,600 per month. The expected sales mix is one table for every four chairs. Calculate the breakeven point in units.
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