Question
Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows: Small Large Selling price per ornament $8.00 $20.00
Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows:
|
| Small | Large |
| Selling price per ornament | $8.00 | $20.00 |
| Variable cost per ornament | 4.00 | 8.00 |
The company sells three small Christmas ornaments for every large Christmas ornament.
The contribution margin income statement for the year ended December 31, 2015 follows:
| Sales revenue | $225,000 |
| Variable costs | 90,000 |
| Contribution margin | 135,000 |
| Fixed costs | 75,000 |
| Profit | $60,000 |
Questions
Calculate the weighted average contribution margin per unit for Bearcat Paws.
Determine the break-even point in units.
Compute the degree of operating leverage.
Based on your calculation in requirement 3, estimate the profit if sales increase by 10%.
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The Employers Guide To Surviving Payroll And Human Resources Audits 2019
Authors: Paul E Love
1st Edition
1073422771, 978-1073422777
