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Please help Exercise 19-15 a-c Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work
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Exercise 19-15 a-c Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net income Manual System $1,560,000 1,248,000 312,000 72,000 $240,000 Computerized System $1,560,000 624,000 936,000 696,000 $240,000 Your answer is correct. Determine the degree of operating leverage for each alternative. (Round answers to 2 decimal places, e.g. 1.25.) Degree of Operating Leverage Manual System 1.3 Computerized System 3.9 your answer is partially correct. Try again. Calculate the increase in Net income for each alternative if sales increased by $110,000. Increase in Net Income 143000 Manual System Computerized System 429000 Which alternative would produce the higher net income? Computerized System LINK TO TEXT Your answer is incorrect. Try again. Calculate the margin of safety ratio. (Round ratios to 2 decimal places, e.g. 0.25.) Margin of Safety ratio Manual System Computerized System 1.67 Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before operating at a loss. Computerized System Step by Step Solution
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