Self-Assessment HW7A (Break-even point, Operating leverage)
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School
University of Maryland, University College *
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Course
330 7980
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
Pages
4
Uploaded by Dogmom87
Question
1
The
Poseidon
Swim
Company
produces
swim
trunks.
The
average
selling
price
for
one
of
their
swim
trunks
is
$38.43.
The
variable
cost
per
unit
is
$18.19,
Poseidon
Swim
has
average
fixed
costs
per
year
of
$24,161.
What
is
the
break-even
point
in
units
for
Poseidon
Swim?
Round
the
answer
to
the
whole
number.
Your
Answer:
1194
Answer
w
Hide
Check
my
answer
The
formula
is:
Qu=F/(P-V),
where
Q
=
the
number
of
units
sold
Qp
=
the
break-even
level
of
Q
P=
unit
sales price
F
=
total
fixed
costs
anticipated
over
the
planning
period
V
=
the unit
variable
cost
Qu=F/(P-V)
=
$24,161
/($38.43
-
$18.19)
=
1194
swim
trunks
Question
4
The
Poseidon
Swim
Company
produces
swim
trunks.
The
average
selling
price
for
one
of
their
swim
trunks
is
$79.04.
The
variable
cost
per
unit
is
$19.73,
Poseidon
Swim
has
average
fixed
costs
per
year
of
$8,405.
Determine
the
degree
of
operating
leverage
for
the
level
of
production
and
sales
427
swim
trunks.
Round
the
answer
to
two
decimals.
Your
Answer:
Answer
W
Hide
Check
my
answer
The
formula
is:
QP-V)-F
Where
Q=
the
number
of
units
sold
P=
unit
sales price
F=
total
fixed
costs
anticipated
over
the
planning
period
V
=
the unit
variable
cost
DOL,
=
427
*($79.04
-
$19.73)
/
[427
*(
$79.04
-
$19.73)
-
$8,405]
=1.5
Question
2
The
Poseidon
Swim
Company
produces
swim
trunks.
The
average
selling
price
for
one
of
their
swim
trunks
is
$33.03.
The
variable
cost
per
unit
is
$21.95,
Poseidon
Swim
has
average
fixed
costs
per
year
of
$50,058.
What
is
the
break-even
point
in
dollar
sales?
Round
the
answer
to
two
decimals.
Your
Answer:
149225.25
Answer
w
Hide
Check
my
answer
Step
1:
Calculate
the
break-even
in
units
Qp,
=F/(P-V),
where
Q
=
the
number
of
units
sold
Qp
=
the
break-even
level
of
Q
P
=
unit
sales
price
F
=
total
fixed
costs
anticipated
over
the
planning
period
V
=
the
unit
variable
cost
Qp,
=
F/(P-V)
=
$50,058
/($33.03
-
$21.95)
=
4517.87
Step
2:
Calculate
break-even
point
in
dollar
sales
4517.87
*
$33.03
=
$149225.25
Question
3
The
Poseidon
Swim
Company
produces
swim
trunks.
The
average
selling
price
for
one
of
their
swim
trunks
is
$77.04.
The
variable
cost
per
unit
is
$18.82,
Poseidon
Swim
has
average
fixed
costs
per
year
of
$13,222.
What
would
be
the
operating
profit
or
loss
associated
with
the
production
and
sale
of
458
swim
trunks?
Round
the
answer
to
two
decimals.
Your
Answer:
1344;
Answer
W
Hide
Check
my
answer
EBIT=Q'P
-
V*Q
-
F,
where
Q=
the
number
of
units
sold
P=
unit
sales price
F=
total
fixed
costs
anticipated
over
the
planning
period
V
=
the unit
variable
cost
EBIT=Q'P-V'Q-F=458"$77.04
-
$18.82'458
-
$13,222
=
13,442.76
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Question
5
The
Poscidon
Swim
Company
produces
swim
trunks.
The average
selling
price
for
one
of their
swim
trunks
is
$76.87.
The
variable
cost
per
unit
is
$27.54,
Poscidon
Swim
has
average
fixed
costs
per
year
of
$9,256.
Assume
that
current
level
of sales
is
344
units.
What
will be the
resulting
percentage
change
in
EBIT
if
they
expect
units
sold
to
changes
by
2.4
percent?
(You
should
calculate
the
degree
of
operating
leverage
first)
(TWrite
the
percentage
sign
in
the
"units"
box).
Round
the
answer
to
two
decimal
places
in
percentage
form.
Your
Answer:
5.28
Answer
units.
W
Hide
Check
my
answer
Step
1:
Calculate
the
degree
of
operating
leverage:
QP
-V)
QP
-V)-F
Where
Q
=
the
number
of
units sold
P
=
unit
sales
price
F
=
total
fixed
costs
anticipated
over
the
planning
period
V
=
the
unit
variable
cost
DOL
=
344
*($76.87
-
$27.54)
/
[344
*(
$76.87
-
$27.54)
-
$9,256
|
=
2.2
Step
2:
Calculate
the
resulting
percentage
change
in
EBIT
if
they
expect
units sold
to
changes
by
2.4
percent?
2.4%
*DOL=2.4%
*2.2=528%