Question
E-Z Seats manufactures swivel seats for customized vans. It currently manufactures 10,900 seats per year, which it sells for $500 per seat. It incurs variable
E-Z Seats manufactures swivel seats for customized vans. It currently manufactures 10,900 seats per year, which it sells for $500 per seat. It incurs variable costs of $240 per seat and fixed costs of $2,267,200. It is considering automating the upholstery process, which is now largely manual. It estimates that if it does so, its fixed costs will be $3,825,900, and its variable costs will decline to $110 per seat. Answer the following questions.
Prepare a CVP income statement based on current activity.
E-Z Seats CVP Income Statement | ||
Net Income/(Loss)Gross ProfitVariable CostsFixed CostsContribution MarginSales | $ | |
Variable CostsContribution MarginGross ProfitFixed CostsSalesNet Income/(Loss) | ||
Net Income/(Loss)Fixed CostsVariable CostsContribution MarginGross ProfitSales | ||
Variable CostsNet Income/(Loss)Fixed CostsGross ProfitSalesContribution Margin | ||
Variable CostsFixed CostsNet Income/(Loss)Gross ProfitContribution MarginSales | $ |
Compute contribution margin ratio, break-even point in dollars, margin of safety ratio, and degree of operating leverage based on current activity. (Round margin of safety ratio and degree of operating leverage to 1 decimal place, e.g. 2.5% or 2.5 and break-even point in dollars to 0 decimal places, e.g. 2,520.)
Contribution margin ratio | % | ||
Break-even point in dollars | $ | ||
Margin of safety ratio | % | ||
Degree of operating leverage |
Prepare a CVP income statement assuming that the company invests in the automated upholstery system.
E-Z Seats CVP Income Statement | ||
Contribution MarginGross ProfitVariable CostsFixed CostsSalesNet Income/(Loss) | $ | |
Fixed CostsGross ProfitSalesContribution MarginVariable CostsNet Income/(Loss) | ||
Contribution MarginSalesGross ProfitNet Income/(Loss)Variable CostsFixed Costs | ||
Fixed CostsNet Income/(Loss)Contribution MarginVariable CostsGross ProfitSales | ||
Fixed CostsGross ProfitContribution MarginNet Income/(Loss)SalesVariable Costs | $ |
Compute contribution margin ratio, break-even point in dollars, margin of safety ratio, and degree of operating leverage assuming the new upholstery system is implemented. (Round degree of operating leverage to 1 decimal place, e.g. 2.5.)
Contribution margin ratio | % | ||
Break-even point in dollars | $ | ||
Margin of safety ratio | % | ||
Degree of operating leverage |
Answer Asap please!!
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