Question
Kyle & Ostrowsky Inc., a manufacturer of championship caliber trophies, sells their product for $50 per unit. Variable costs are 60% of the selling price,
Kyle & Ostrowsky Inc., a manufacturer of championship caliber trophies, sells their product for $50 per unit. Variable costs are 60% of the selling price, and comapny has fixed costs that amount to $400,000. Current Sales total 16,000 units.
A. How many units must Kyle & Ostrowsky sell to break even?
B. How much will profits increase (assume no taxes) for each additional unit sold above the break even level?
C. In order to produce a profit of $22,000, Kyle & Ostrowsky must sell what dollar amount of trophies?
D. What is the margin of safety for Kyle % Ostrowsky given their current level of sales?
E. if Kyle & Ostrowsky experience a 10% increase in sales, what will be their change in operating income? You must display and use their degree of operating leverage for credit.
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