Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $100,500. Calculate degree of operating income
Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $100,500. Calculate degree of operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Degree of Operating Leverage
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory
Calculate degree of operating income
Expert Solution
Step 1
Given that:
Number of bicycles sold = 5000
Sales price per unit = $75 per unit
Variable costs per unit = $45 per unit
Net operating Income = $100500
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