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 | $ | 191,000 | $ | 191,000 | ||
| Less: Variable cost | 94,000 | 52,000 | ||||
| Contribution margin | $ | 97,000 | $ | 139,000 | ||
| Less: Fixed cost | 18,000 | 60,000 | ||||
| Net operating income | $ | 79,000 | $ | 79,000 | ||
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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Audit Education
Authors: Karen Van Peursem, Elizabeth Monk, Richard M.S. Wilson, Ralph Adler
1st Edition
1138192856, 978-1138192850
