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Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable
Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating incone $1,800,000 1,000,000 720,000 $76,000 144,000 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 38,400 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Contribution margin per skateboard 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Selling price Variable expense Amount per skateboard per skateboard 12 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) Number of skateboards 01:40:41 1-d. Compute the degree of operating leverage at the level of sales that you computed in Requirement (1c). Degree of operating leverage 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 intermediate calculations.) Contribution margin Unit sales to break-even point skateboards
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