PART 2

Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Before Automation Automation $198,000 78,000 Contribution margin $120,000 $160,000 15,000 After Sales revenue $198,000 38,000 Less: Variable cost Less: Fixed cost 58,000 Net $105,000 $102,000 operating income Required: 1. Calculate Lobster Trap's break-even sales dollars before and after automation. (Round your contribution margin ratio to 4 decimal places and final answers to 2 decimal places.) Break-Even Sales Dollars Before Automation Break-Even Sales Dollars After Automation 2. Compute Lobster Trap's degree of operating leverage before and after automation. (Round your answers to 4 decimal places.) DOL Before Automation DOL After Automation Remo Company and Angelo Inc. are separate companies that operate in the same industry. Following are variable costing income statements for the two companies showing their different cost structures: Angelo Remo Co. Inc. $275,000 $275,000 200,000 125,000 Sales revenue Less: Variable cost Contribution margin Less: Fixed cost Net operating income 75,000 $150,000 35,000 110,000 $ 40,000 $ 40,000 Required Calculate the break-even sales revenue for each company. (Round your "Contribution Margin Ratio" percentage to 2 decimal places (i.e. .1524 final answers to 2 decimal places.) 15.24%) and Remo Co Angelo Inc Break-Even Sales Revenue