Question Details

(Solved) (Latest ver. Aug 2020) - Operating leverage and operating income

Brief item decscription


Item details:

Question:

Please complete the attachment.

Exercise 6-8
Per UnitTotal
Sales100% $120,000
Variable Costs70% 84,000
Contribution margin30% 36,000
Fixed expense 24,000
Net operating income $12,000

This time we are using the contribution margin percentage, rather than per unit.

Req. 1--Show your computation of the degree of operating leverage here:

Req 2--Show your computation of the operating income with a 10% increase in sales.

Req 3--Use this contribution margin income statement. Change the sales and verify your
operating income that you computed in req. 2.

Per UnitTotal
Sales100% $120,000
Variable Costs70% 84,000
Contribution margin30% 36,000
Fixed expense 24,000
Net operating income $12,000

Exercise 6-11
Show your computations of operating income and then adjust the contribution
margin income statement on the right to verify your answer, as was shown in class.

This is the original contribution margin income statement. You will be adjusting
this statement for each condition, #1-#4

Per UnitTotal
Sales5 $150,000
Variable Costs3 90,000
Contribution margin2 60,000
Fixed expense 50,000
Net operating income $10,000

No. of units 30,000

Condition #1--number of units sold increases by 15%

Show computations:Per UnitTotal
Sales5 $150,000
Variable Costs3 90,000
Contribution margin2 60,000
Fixed expense 50,000
Net operating income $10,000

No. of units 30,000

Condition #2--The selling price decreases by 50 cents per unit, and the number o units sold
increases by 20%

Show computations:Per UnitTotal
Sales5 $150,000
Variable Costs3 90,000
Contribution margin2 60,000
Fixed expense 50,000
Net operating income $10,000

No. of units 30,000

Condition #3--The selling price increases by 50 cents per unit, fixed expenses increase by
$10,000 and the number of units sold decreases by 5%.

Show computations:Per UnitTotal
Sales5 $150,000
Variable Costs3 90,000
Contribution margin2 60,000
Fixed expense 50,000
Net operating income $10,000

No. of units 30,000

Condition #4--Variable expenses increase by 20 cents per unit, the selling price
increases by 12% and the number of units sold decreases by 10%.

Show computations:Per UnitTotal
Sales5 $150,000
Variable Costs3 90,000
Contribution margin2 60,000
Fixed expense 50,000
Net operating income $10,000

No. of units 30,000

 







About this question:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Sep 16, 2020

PRICE: $11.5

Solution~00011329.zip (18.37 KB)

Buy this answer for only: $11.5

Pay using PayPal (No PayPal account Required) or your credit card. All your purchases are securely protected by PayPal.
SiteLock

Need a similar solution fast, written anew from scratch? Place your own custom order

We have top-notch tutors who can help you with your essay at a reasonable cost and then you can simply use that essay as a template to build your own arguments. This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student. New solution orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

Order Now