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Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $32. 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 $32. The skateboards are manufactured in an antiquated plant that relies heavily on direct labour workers. Thus, variable costs are high, totaling $22.40 per skateboard, of which 70% is direct labour cost. Over the past year the company sold 45,000 skateboards, with the following operating results Sales (45,000 skateboards) Variable expenses $1,440,000 1,008,000 Contribution margin Fixed expenses 432,000 288,000 Net operating income $ 144,000 Management is anxious to maintain and perhaps even improve its present evel 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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