PA6-4 (Static) Analyzing Break-Even Point, Target Profit, Degree of Operating Leverage [LO 6-1, 6-2, 6-5]

Ramada Company produces one golf cart model. A partially complete table of company costs follows:

Number of golf carts produced and sold		600		800		1,000
Total costs
Variable costs	$	?	$	400,000	$	?
Fixed costs per year		?		250,000		?
Total costs		?	$	650,000		?
Cost per unit
Variable cost per unit		?		?		?
Fixed cost per unit		?		?		?
Total cost per unit		?		?		?

Required: 1. Complete the table.

2. Ramada sells its carts for $1,200 each. Prepare a contribution margin income statement for each of the three production levels given in the table.

4. Calculate Ramadas break-even point in number of units and in sales revenue.

5. Assume Ramada sold 400 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.

6. Calculate the number of carts that Ramada must sell to earn $65,000 profit.

7. Calculate Ramadas degree of operating leverage if it sells 850 carts.

8. Using the degree of operating leverage, calculate the change in Ramadas profit if sales are 10 percent less than expected.

X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 4 Required 5 Required 6 Required 7 Required 8 Calculate Ramada's break-even point in number of units and in sales revenue. (Round your "Unit" and "Sales Revenue" answers to the nearest whole number.) Break-Even Units 358 Carts Break-Even Sales Revenue $ 429,600 X