Question
This is all the information I was given. Hense why I am not understanding it. Per the scenario below, I am being asked to create
This is all the information I was given. Hense why I am not understanding it.
Per the scenario below, I am being asked to create a graph that contains no data. I'm not understanding how to do this? Please advise per the work problem below:
Farmers & Ranchers Bank was formed in 1913 to provide banking services to an area of the rural southwestern United States. Their business consisted primarily of crop and cattle production loans to the local agricultural community. During the 1960's oil and natural gas were discovered in the area which has provided an additional customer base of industry personnel. These personnel together with local supporting businesses created additional demand for personal banking services. By the 1980's the Bank had established several dozen branches in smaller communities. At that time, the bank began installing an Automated Teller Machine (ATM) at these branches. The ATMs not only provided additional hours of service, they replaced a few of the tellers. While tellers do remain in most locations, the number of tellers has grown very little. The number of ATMS, on the other hand, has grown substantially to the present. Some larger branches have more than one ATM and some locations are only an ATM.
1. Using a unit level analysis, develop a graph with two lines representing the Bank's cost structure. (Be sure to label the axes and lines. You must develop the appropriate data to support the answers in your graph.)
In the 1980s
at the present time
With sales revenues as the independent variable, what is the likely impact of the changed cost structure on the Bank's
Contribution Margin Percent
Break Even Point
Discuss how the change in the cost structure affected the Bank's operating leverage and how this affects profitability under rising or falling sales scenarios.
Provide 3 specific managerial decisions that can have an impact on the degree of operating leverage of a firm.
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