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please answer all parts and show work. i will give all thumbs up! Saruman Division produces memory enhancement kits for Barad - Dur's Uruk. Hai
please answer all parts and show work. i will give all thumbs up!
Saruman Division produces memory enhancement kits for Barad - Dur's Uruk. Hai Microwaves. Sales of the kits have been very erratic, with some months showing a profit and some months showing a loss. Currently, the division produces as many units as are required for sales. The division's contribution margin income statement for the most recent month is given below: Sales (13,500 units at $20 per unit) $270,000 Variable expenses (all production related) 189,000 Contribution margin 81,000 Fixed expenses (all production related) 90,000 Net operating loss (9.000) 7) Compute the division's a) CM ratio and (2 points) b) its break-even point in units. (4 points) Format Tools Table 8) Refer to the original data. By automating, the division could slash its unit variable cost in half. However, fixed costs would increase by $118,000 per month (1) At what volume level would the division be indifferent between automation and the current non-automated process? That is what is the decision rule for automation in terms of volume? (8 points) Edit View Insert Format Tools Table 9) Refer to the original data. By automating, the division could slash its unit variable cost in half. However, foxed costs would increase by $118,000 per month Based on the decision rule above, would you recommend that the division automate its operations if volume continues at the current level? (2 points) 10) Assume for this part that the selling price per kit is $24 per unit. All other data are the same as stated in the problem. What is the Operating Leverage Ratio (OLR)? If sales decline by 10%, what does the OLR predict will be the effect on operating income? (2+2 po Edit View Insert Format Tools Table 12pt Paragraph BIU A TO FA D2 11)Assume just for this part only that production of memory kits is increased to 15000 units. However, sales are still 13,500 units. All other data are the same as stated in the problem. What would be the division's reported income under Absorption Costing? (5 points) Edit View Insert Format Tools Table 12pt Paragraph | e per lo D Step by Step Solution
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