Operating Leverage

SungSam Enterprises reports the following data:

Sales	$340,000
Variable costs	180,000
Contribution margin	$160,000
Fixed costs	80,000
Income from operations	$ 80,000

Determine SungSam Enterprises's operating leverage.

Sales Mix and Break-Even Analysis

Einhorn Company has fixed costs of $105,000. The unit selling price, variable cost per unit, and contribution margin per unit for the companys two products follow:

Product	Selling Price		Variable Cost per Unit			Contribution Margin per Unit
QQ	$50		$35			$15
ZZ	60		30			30

The sales mix for products QQ and ZZ is 40% and 60%, respectively. Determine the break-even point in units of QQ and ZZ.

a. Product QQ units b. Product ZZ units

Sales Mix and Break-Even Analysis

Wide Open Industries Inc. has fixed costs of $475,000. The unit selling price, variable cost per unit, and contribution margin per unit for the companys two products follow:

Product	Selling Price		Variable Cost per Unit			Contribution Margin per Unit
AA	$145		$105			$40
BB	110		75			35

The sales mix for products AA and BB is 60% and 40%, respectively. Determine the break-even point in units of AA and BB. Round your interim computations to nearest cent, if required.

a. Product AA units b. Product BB units

Target Profit

Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000.

Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000.

a. Break-even point in sales units	units
b. Break-even point in sales units if the company desires a target profit of $50,000	units