Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 8-5 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales (LO1- CC2, 3; LO2 CC5, 6, 7,10) Tyrene Products manufactures recreational equipment. One of
Problem 8-5 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales (LO1- CC2, 3; LO2 CC5, 6, 7,10) Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $30. The skateboards are manufactured in an antiquated plant that relies heavily on direct labour workers. Thus, variable costs are high, totaling $18.00 per skateboard, of which 60% is direct labour cost. Over the past year the company sold 51,000 skateboards, with the following operating results Sales (51,000 skateboards) Variable expenses $1,530,000 918,000 Contribution margin Fixed expenses 612,000 492,000 Net operating income $ 120,000 Management is anxious to maintain and perhaps even improve its present evel of income from the skateboards Required 1a. Compute the CM ratio and the break-even point in skateboards. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Contribution margin Unit sales to break-even point skateboards 1b. Compute the degree of operating leverage at last year's level of sales. (Round your answer to 2 decimal places.) Degree of operating leverage
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