Question
Question 3 (13 marks) Malverns Bicycle Co is a company that manufactures bicycles. Total Fixed Costs: $1,150,000 Variable Costs: $105/bike Selling Price: $230/bike Sales Volume:
Question 3 (13 marks)
Malverns Bicycle Co is a company that manufactures bicycles.
Total Fixed Costs: $1,150,000
Variable Costs: $105/bike
Selling Price: $230/bike
Sales Volume: 14,000
(c) Calculate the target operating profit. (2 marks)
(d) Calculate the contribution margin ratio and target sales revenue. (2.5 marks)
(e) Use the Degree of Leverage (DOL) to calculate the new operating profit if sales volume falls by 10%. (3.5 marks)
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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
