4. Operating Leverage. Natural Bodyworks (NB) produces the popular Ab Stretcher that they sell for $200 per unit. NB's total fixed costs (fixed operating costs + depreciation) for the Ab Stretcher are $200,000. Their variable costs are $30 per unit. They are financed entirely by equity and face a 21% corporate tax rate. If sales increase from 4,000 units to 5,000 units, what is the percentage increase in NOI? Question 5 5. Break-even point. NB's managers are concerned about the operating leverage of the Ab Stretcher project. Next year's forecast sales are 3,500 units and they would like to know if The Ab Stretcher will be profitable at this sales level. The annual depreciation for the Ab Stretcher project is $100,000. Sales price is $200 per unit and variable cost per unit is $30. Fixed operating costs are $100,000 per year and the tax rate is 21%. What is the break-even point?

4. Operating Leverage. Natural Bodyworks (NB) produces the popular Ab Stretcher that they sell for $200 per unit. NB's total fixed costs (fixed operating costs + depreciation) for the Ab Stretcher are $200,000. Their variable costs are $30 per unit. They are financed entirely by equity and face a 21% corporate tax rate. If sales increase from 4,000 units to 5,000 units, what is the percentage increase in NOI? Question 5 5. Break-even point. NB's managers are concerned about the operating leverage of the Ab Stretcher project. Next year's forecast sales are 3,500 units and they would like to know if The Ab Stretcher will be profitable at this sales level. The annual depreciation for the Ab Stretcher project is $100,000. Sales price is $200 per unit and variable cost per unit is $30. Fixed operating costs are $100,000 per year and the tax rate is 21%. What is the break-even point?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Louise Corp. has a contribution margin ratio of 27%, fixed costs of $48,870, and a profit of $39,420. What are total sales? Multiple Choice $327,000 $88,290 $23,838 $186,857
If the objective of the firm is to get 25% profit, how many units does the firm need to sell if the price per unit is $250? Given information: Annual fixed costs are 114,000, CTO is .65, breakeven point is 175,384.62.
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Boom Company has sales volume of 70,000 units with a unit selling price of $120 per unit. The variable expenses are $80 per unit, and the total fixed expenses are $2,100,000. 15. What is the degree of operating leverage? * 2.00 3.00 4.00 5.00 None of the above 16. If the sales volume increases by 15%, and all other items are the same, what will be the effect on the net operating income? * The net operating income will increase by $420,000 The net operating income will increase by $700,000 The net operating income will increase by $1,120,000 The net operating income will increase by $2,800,000 None of the above O O O
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Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.
Rancor Electronics sells 6,000 mp3 players and earns Tk.3.0 million in revenues. Rancor's variable costs are Tk.500,000 and its fixed operating costs are Tk.1.52 million. a. How many mp3 players does Rancor have to sell to recover all its operational costs? b. Can Rancor earn a larger increase in operating income by making a smaller increase in sales? Explain. c. Suppose Rancor has Tk.1.2 million in debts at a 12 percent rate of interest and is subject 38 percent tax rate. How many mp3 players will Rancor have to sell in order attain its financial breakeven point?
Chapter: Cost Volume Profit (CVP) Analysis Q) Chaudhary Group Ltd manufactures premium high definition televisions. The firm’s fixed costs are $4,000,000 per year. The variable cost of each TV is $2,000, and the TVs are sold for $3,000 each. The company sold 5,000 TVs during the previous year. (In the following requirements, ignore income taxes) Required: Treat each of the requirements as independent situations:a) Calculate the break-even point in units. b) What will the new break-even point be if fixed costs increase by 10 per cent? c) What was the company’s net profit for the previous year? d) The sales manager believes that a reduction in the sales price to $2,500 will result in orders for 1,200 more TVs each year. What will the break-even point be if the price is changed?
I need both solution please ....
A company wants to expand by offering a new product. Expected cost and revenue data for this product are: Annual sales 5,000 units Unit selling price ? Unit variable costs: Production $ 30.20 Selling 6. Incremental fixed costs per year: 32:16 Production $35,000 Selling $45,000 If the company adds this new product, sales of its other product lines will be impacted, causing the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge for its new product without affecting the company's total profits? Multiple Choice $39.90 $52.20
compute for the following items: g. If breakeven sales in units will increase by 10,000 units, how much will be the increase/decrease in profits? h. If breakeven sales in units will decrease by 4,000 units, how much will be the increase/decrease in profits? i. If the firm wants to increase its current profits by P 60,000. How much sales revenue does it have to make?

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