Question
Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Before Automation After Automation Sales revenue $
Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows:
| Before Automation | After Automation | |||||
| Sales revenue | $ | 190,000 | $ | 190,000 | ||
| Less: Variable cost | 93,000 | 42,000 | ||||
| Contribution margin | $ | 97,000 | $ | 148,000 | ||
| Less: Fixed cost | 11,000 | 64,000 | ||||
| Net operating income | $ | 86,000 | $ | 84,000 | ||
Required:
1. Calculate Lobster Traps break-even sales dollars before and after automation.
2. Compute Lobster Traps degree of operating leverage before and after automation.
- Required 1
- Required 2
Calculate Lobster Traps break-even sales dollars before and after automation. (Round your contribution margin ratio to 4 decimal places and final answers to 2 decimal places.)
|
- Required 2
Compute Lobster Traps degree of operating leverage before and after automation. (Round your answers to 4 decimal places.)
|
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ACCA Approved Study Text P7 Advanced Audit And Assurance
Authors: BPP
1st Edition
1472744349, 978-1472744340
