Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below: Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break even point for the most recent year was 41,600 units. Compute the CM per skateboard. (Do not round intermediate colculations.) 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your onswers to 2 decimal places.) 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediote calculations.) 1.d. Compute the degree of operating leverage at the level of sales that you computed in Requirement (1c). 2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3.00 per skateboard next year if this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new break-even point in skateboards? (Do not round intermediote calculations.) 3. Refer to the data in Requirement (Z) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to eam the same nel operating income, $156,000, as in the most recent year? (Do not round intermediote colculations.) 4. Refer again to the data in Requitement (2) above. The president has decided that the company may have to ralse the selllng pice of ts skateboards. If Tyrene Products wants to mointain the same. CM ratio as last ycar, what selling price per skateboard must if charge hext year to cover the increased labour costs? (Do not round intermediate colculations. Round your answer to 2 decimal places.) 5. Reler to the original data. The company is considering the construction of a new, automated plant. The new plant would result in the contribution margin per unit increasing by 60%, but it would cause foxed costs to increase by 90%. If the new plant is built, what would pe the company's new CM ratio and new break-even point in skatebourds? (Do not round intermediote colculotions.) 5. Refer to the data in Requirement (5) above. b. If the new plant is built, how many skateboards will have to be sold next year to eam the same net operating income, $156,000, as last year? (Do not round intermediote calculations.) b-1. Assume that the new plant is constructed and that next year the company manufactures and sells the same number of skateboards as sold in the most recentyear. Prepare a contribution format income statement. (Do not round intermediate calculations.) b-2. Compute the degree of operating leverage. (Do not round intermediate calculations.)
