Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cost Information Option A Option B $100 $100 Delivery price (revenue) per shipment Variable cost per shipment delivered $85 $60 Contribution Margin per unit $15
Cost Information Option A Option B $100 $100 Delivery price (revenue) per shipment Variable cost per shipment delivered $85 $60 Contribution Margin per unit $15 $40 Fixed costs (annual) $1,200,000 $4,500,000 Management wants you to write a professional report answering the following questions: Questions 1) What is the break-even point, in terms of volumefie, number of shipments per year), for Option A? Option B? (2) How many shipments would have to be made under Option A to produce operating income of $30,000 for an annual period? (3) How many shipments per year would have to be made under Option A to produce an operating margin equal to 99 of Sales revenue? (4) How many shipments are required under Option to produce net income of $180,000 per year, given a corporate tax rate of 40% (5) Assume that for the coming year total fixed costs are expected to increase by 159 for each of the two options. What is me new break even point in terms of number of shipments, for each option? By what percentage did the break-even point change for each case? How do these figures compare to the percentage increase in budgeted fixed costs? Type here to search (6) Assume an average income tax rate of 204 What volume number of shipments would be needed to generate net income of 5% of revenue for each option? 7 Which option do you think is the more profitable one for this business? Explain 18) Which option do you consider to be more risky to the business? Explain (ezcutate degree of operating leverage to help answer this Question Evaluation Cave Analysis wel bereits entirety out of the wroncates the dents another and their
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