Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Pristine Microware produces and sells different types of solid state hard drives, each varying in quality and storage capacity. Below is some information about its
Pristine Microware produces and sells different types of solid state hard drives, each varying in quality and storage capacity. Below is some information about its latest products.Silver (500 GB)Price$50Variable Cost$22Fixed Cost16,800Projected Volume800Gold (1 TB)Price$90Variable Cost$45Fixed Cost22,500Projected Volume700Platinum (2 TB)Price$185Variable Cost$135Fixed Cost18,000Projected Volume400Required:Create a Contribution Format Income Statement for each of the solid state hard drives and calculate Breakeven Point, Margin of Safety, and Degree of Operating Leverage using the statements.Silver (500 GB)SalesVariable CostContribution MarginFixed CostNet Operating IncomeBreakeven Point (units)Breakeven Point (dollars)Margin of Safety (units)Margin of Safety (dollars)Margin of Safety (%)Degree of Operating LeverageGold (1 TB)SalesVariable CostContribution MarginFixed CostNet Operating IncomeBreakeven Point (units)Breakeven Point (dollars)Margin of Safety (units)Margin of Safety (dollars)Margin of Safety (%)Degree of Operating LeveragePlatinum (2 TB)SalesVariable CostContribution MarginFixed CostNet Operating IncomeBreakeven Point (units)Breakeven Point (dollars)Margin of Safety (units)Margin of Safety (dollars)Margin of Safety (%)Degree of Operating LeverageUsing the Degree of Operating Leverage only, fill in the information about sales volume increases.Silver (500 GB)Projected Volume Increase10%New Net Operating IncomeGold (1 TB)Projected Volume Increase-10%New Net Operating IncomePlatinum (2 TB)Projected Volume Increase30%New Net Operating IncomeProve these numbers true by applying the change in volume to a new Contribution Format Income Statement.Silver (500 GB)SalesVariable CostContribution MarginFixed CostNet Operating IncomeGold (1 TB)SalesVariable CostContribution MarginFixed CostNet Operating IncomePlatinum (2 TB)SalesVariable CostContribution MarginFixed CostNet Operating Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started