Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please can someone help, I don't understand this and could really use a step-by -step explanation. Osprey Co. manufactures and sells economically priced kayak paddles.

Please can someone help, I don't understand this and could really use a step-by -step explanation.

image text in transcribed
Osprey Co. manufactures and sells economically priced kayak paddles. Information for the most recent year-end is given below: Sales (30,000 units) $1,800,000 Variable expenses 720,000 Contribution margin 1,080,000 Fixed expenses 350,000 Operating income $730,000 You are working as an intern at Osprey. The Controller wants to test your understanding of CVP analysis and has posed the following questions. 1. Contribution Margin Ratio 2, How many units does Osprey need to sell to break even 3. Break even point in sales dollars 4. Assume sales increase by $270,000 next year. If cost behavior patterns remain unchanged, by how much will the net operating income increase? 5. Assume Next years management wants to earn a profit of $830,000. How many units will Osprey need to sell to earn this target profit? 6.; Refer to the original data. Compute Osprey's margin of safety in dollars. 7. Compute Osprey's margin of safety percentage. 8. Refer to the original data. In an effort to improve product quality, Osprey is considering the use of higher quality fiberglass for its paddles. The higher-quality fiberglass would increase variable costs by $2 a unit, but management could eliminate one quality inspector who is paid a salary of $60,000 per year. The sales manager estimates that the higher-quality fiberglass would increase sales by 15%. Assuming the changes are made as described above, what would operating income be

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Finance

Authors: Arthur Keown, John Martin, J. Petty

10th Edition

0136102654, 9780136102656

More Books

Students also viewed these Accounting questions