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 | $ | 195,000 | $ | 195,000 | ||
| Less: Variable cost | 104,000 | 56,000 | ||||
| Contribution margin | $ | 91,000 | $ | 139,000 | ||
| Less: Fixed cost | 14,000 | 56,000 | ||||
| Net operating income | $ | 77,000 | $ | 83,000 | ||
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.
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Financial Accounting
Authors: Karen Bird, Gene Imhoff
5th Edition
0984200568, 978-0984200566
