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Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $36. The skateboards are manufactured in an antiquated plant that relies
Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $36. The skateboards are manufactured in an antiquated plant that relies heavily on direct labour workers. Thus, variable costs are high, totaling $25.20 per skateboard, of which 70% is direct labour cost. Over the past year the company sold 52,000 skateboards, with the following operating results Sales (52,000 skateboards) Variable expenses $1,872,000 1,310,400 Contribution margin Fixed expenses 561,600 453,600 Net operating income $ 108,000 Management is anxious to maintain and perhaps even improve its present level 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
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