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Crane Hospital is contemplating an investment in an automated surgical system. Its current process relies on a number of skilled physicians. The new equipment would
Crane Hospital is contemplating an investment in an automated surgical system. Its current process relies on a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The hospital requested an analysis of the old technology versus the new technology. The accounting department has prepared the following CVP income statements for use in your analysis. Old New Sales $3,217,000 $3,217,000 Variable costs 1,690,720 1,342,960 Contribution margin 1,526,280 1,874,040 Fixed costs 1,043,280 1,391,040 Operating income $483,000 $483,000 (a) Calculate the degree of operating leverage for the hospital under each scenario. (Round answers to 2 decimal places, e.g. 52.75.) Old New Operating leverage
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