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7 4. Compute the degree of operatingleverage 8 Sales 9 Variable expenses o Contribution margin 1 Fixed expenses $ 840,000 2 Net operating income 3 4 Degree of operating leverage %24

7 4. Compute the degree of operatingleverage 8 Sales 9 Variable expenses o Contribution margin 1 Fixed expenses $ 840,000 2 Net operating income 3 4 Degree of operating leverage %24

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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23 3. Compute the margin of safety 24 Margin of safety in dollars $315,000 25 Margin of safety percentage 37.50% 26 27 4. Compute the degree of operating leverage 28 Sales 2$ 840,000 29 Variable expenses 30 Contribution margin 31 Fixed expenses 32 Net operating income 33 34 Degree of operating leverage 35
Transcribed Image Text:23 3. Compute the margin of safety 24 Margin of safety in dollars $315,000 25 Margin of safety percentage 37.50% 26 27 4. Compute the degree of operating leverage 28 Sales 2$ 840,000 29 Variable expenses 30 Contribution margin 31 Fixed expenses 32 Net operating income 33 34 Degree of operating leverage 35
4 Unit sales 11,200 units 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses $75 per unit $45 per unit $210,000 8 9 Use the data to answerthe following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit $75 per unit 13 Variable expenses per unit 45 per unit 14 Contribution margin per unit $30 per unit 15 16 CM ratio 40% 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales 7,000 units 21 Break-even in dollar sales $525,000 22 23 3. Compute the margin of safety $315,000 24 Margin of safety in dollars 25 Margin of safety percentage 37.50% 26
Transcribed Image Text:4 Unit sales 11,200 units 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses $75 per unit $45 per unit $210,000 8 9 Use the data to answerthe following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit $75 per unit 13 Variable expenses per unit 45 per unit 14 Contribution margin per unit $30 per unit 15 16 CM ratio 40% 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales 7,000 units 21 Break-even in dollar sales $525,000 22 23 3. Compute the margin of safety $315,000 24 Margin of safety in dollars 25 Margin of safety percentage 37.50% 26
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