Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ramada Company produces one golf cart model. A partially complete table of company costs follows: 1,500 2,000 2,500 $ $ Number of golf carts produced
Ramada Company produces one golf cart model. A partially complete table of company costs follows: 1,500 2,000 2,500 $ $ Number of golf carts produced and sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit ? ? 2 $1,440,000 600,000 2,040,000 ? ? ? 2 ? ? ? ? ? ? ? ? Required: 1. Complete the table. 2. Ramada sells its carts for $1,800 each. Prepare a contribution margin income statement for each of the three production levels given in the table. 4. Calculate Ramada's break-even point in number of units and in sales revenue. 5. Assume Ramada sold 600 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year. 6. Calculate the number of carts that Ramada must sell to earn $48,000 profit. 7. Calculate Ramada's degree of operating leverage if it sells 2,050 carts. 8. Using the degree of operating leverage, calculate the change in Ramada's profit if sales are 20 percent less than expected. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.) 1,500 Units 2,000 Units 2,500 Units Number of Golf Carts Produced and Sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $ 1,440,000 600,000 $ 2,040,000 $ $ 0 0 $ 0.00 $ 0.00 $ 0.00 Ramada sells its carts for $1,800 each. Prepare a contribution margin income statement for each of the three production levels given in the table. Golf Carts Produced and Sold 1,500 units 2,000 units 2,500 units Contribution Margin Income from Operations Calculate Ramada's break-even point in number of units and in sales revenue. (Round your "Unit" and "Sales Revenue" answers to the nearest whole number.) Carts Break-Even Units Break-Even Sales Revenue Calculate the number of carts that Ramada must sell to earn $48,000 profit. Target Unit Sales Carts Calculate Ramada's degree of operating leverage if it sells 2,050 carts. (Round your answer to 4 decimal places.) Degree of Operating Leverage Using the degree of operating leverage, calculate the change in Ramada's profit if sales are 20 percent less than expected. (Round your answer to 3 decimal places. (i.e. .12345 should be entered as 12.345%.)) Effect on Profit %
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