A1 fx Chapter 5: Applying Excel C D E G T L M N o P A 1 Chapter 5: Applying Excel 2 3 Data 4 unit sales 5 Selling price per unit 6 Variable expenses per un 2 Fixed expenses 20,000 units san per unit S45 per unit $240.000 7 per unit ? per unit 2 per unit 7 ? urits 7 ? 7 9 Enter Pamuis ita cach of the collected with a ?babw Review Problem: CVP Relationships 11 Computo the GM radio and variable expense radilo 13 Selling price per unit 14 Varable expenses per un 15 Contrbulion margin perunt 16 17 CM ratio 12 Varable expense rato 19 20 Compute the break-even 21 Break oven in unit sales 22 Break-even in dollar sacs 23 24 Compute the margin of anfety safety 25 Margin of safety in dollars 26 Margin of safety percentage 27 28 Compute the degree of operating leverage 29 Sales 30 Variable expenses 31 Contbulan margin 32 Fixed expenses 33 Net operatina inom 34 35 Degree of operating leverage 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 ? 7 7 ? ? ? Chapter 5 Form + Ready 100% 2. Change all of the numbers in the data area of your worksheet so that it looks like this: A B 1 Chapter 5: Applying Excel 2 3 Data 4 50,000 units 5 Unit sales Selling price per unit Variable expenses per unit $ 30 per unit $ 6 12 per unit Fixed expenses $ 855,000 7 If your formulas are correct, you should get the correct answers to the following questions. (a) What is the break-even in dollar sales? Break-even in dollar sales (b) What is the margin of safety percentage? Margin of safety percentage % (c) What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage 3. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%. Percentage increase in net operating income % 4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: A B Chapter 5: Applying Excel Data 4 5 $ Unit sales Selling price per unit Variable expenses per unit Fixed expenses 60,000 units 30 per unit 12 per unit $ 6 $ 855,000 7 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (loss) (b) By what percentage did the net operating income increase? Percentage increase in net operating income % 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $17,000 and at that price, Thad estimates 200 units would be sold each year. The variable cost to produce and sell the cycles would be $12,750 per unit. The annual fixed cost would be $425,000. a. What is the break-even in unit sales? Break-even in unit sales b. What is the margin of safety in dollars? Margin of safety in dollars c. What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the Western Hombre would have to be reduced to $14,200 to compete effectively. In that event, Thad would also reduce fixed expenses to $336,000 by reducing advertising expenses, but he still hopes to sell 200 units per year. d. What would the net operating income be in this situation? (Negative amount should be indicated by a minus sign.) Net operating income (loss)
