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 | $ | 193,000 | $ | 193,000 | ||
| Less: Variable cost | 108,000 | 40,000 | ||||
| Contribution margin | $ | 85,000 | $ | 153,000 | ||
| Less: Fixed cost | 19,000 | 65,000 | ||||
| Net operating income | $ | 66,000 | $ | 88,000 | ||
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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Accounting and auditing research tools and strategies
Authors: Thomas Weirich, Thomas Pearson, Natalie Tatiana
8th edition
9781118806487, 1118027078, 1118806484, 978-1118027073
