Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Dreamer Company has provided the following data from the last year: Required: Sales (9,000 units) Variable expenses Contribution margin Fixed expenses Operating income 1.

image text in transcribed

Dreamer Company has provided the following data from the last year: Required: Sales (9,000 units) Variable expenses Contribution margin Fixed expenses Operating income 1. Calculate the break-even sales in dollars. (2 marks) 2. Calculate the margin of safety in dollars. (2 marks) $ 72,000 32,400 39,600 25,000 $ 14,600 3. Calculate the company's degree of operating leverage. Round your answer to one decimal place. (2 marks) 4. Use the operating leverage calculated in part 3 to calculate the percentage increase in operating income if sales increase by 30%. (1 mark) 5. How many dollars of sales are needed to reach a before-tax operating profit of $16,000? (2 marks) 6. Prepare an incremental analysis to calculate the dollar impact on operating income of having a $2,000 advertising campaign to increase sales by 10%. Should the company proceed with this course of action? Why? (3 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Texts and Cases

Authors: Robert Anthony, David Hawkins, Kenneth Merchant

13th edition

1259097129, 978-0073379593, 007337959X, 978-1259097126

More Books

Students also viewed these Accounting questions