A bakery business has variable expenses equal to 50% of sales andmonthly fixed expenses of $150,000. The monthly target operatingincome is $50,000.What is the operating leverage factor at the target level of operatingincome?

Step 1: Definition of Key TermsOperating Leverage Factor: This measures how sensitive a company's…

Answered: A bakery business has variable expenses…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
Jordan's Bakery has a monthly target operating income.
Jordan's Bakery has a monthly target operating income of $8,000. Variable expenses are 45% of sales, and monthly fixed expenses are $5,500. What is Jordan's operating leverage factor at the target level of operating income?
What is Alina's operating leverage factor at the target level of operating income
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Neeley Grocery has a monthly target operating income of $25,000. Variabe expenses are 20% of sales and monthly fixed expenses are $15,000. What is Neeley Grocery's operating leverage factor at the target level of operating income?
Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Western Repair Shop's margin of safety as a percentage of target sales. 3. What is Western Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16%? Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. Target sales in dollars Margin of safety in dollars The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.) Break-even sales in dollars =
Light Me Up Lamps has variable expenses of 30% of sales and monthly fixed expenses of $140,000. The monthly target operating income is $80,000. What is Light Me Up Lamps' operating leverage factor at the target level of operating income?
For a table manufacturing company, variable cost is $125.00 per Unit, rent is $2,544.00 per month and insurance is $1,095.00 per month. Selling price for a table is $200.00 per Unit, How much is the company contributing to covering their fixed costs or generating profits? Submit
PB&J Eatery has a monthly target operating income of $8,400. Variable expenses are 60% of sales and monthly fixed expenses are $12,600. What is PB&J Eatery's operating leverage factor at the target level of operating income? Round answer to one decimal place. Answer:

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A bakery business has variable expenses equal to 50% of sales and monthly fixed expenses of $150,000. The monthly target operating income is $50,000. What is the operating leverage factor at the target level of operating income?