3Question 5During August, Tyson Company sold 5,400 units and reported thefollowing income statement:Sales revenueVariable costsFixed costsNet income$216,000$ 70,200$ 86,400$ 59,400During September, Tyson Company sold 7,200 units.Calculate Tyson Company's degree of operating leverage for themonth of September.0.75

Operating leverage, often known as EBIT, gauges a company's operating income's responsiveness to…

Answered: During August, Tyson Company sold 5,400…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sun Corporation's contribution format income statement for July appears below: Sales $ 425,500 Variable expenses 234,025 Contribution margin 191,475 Fixed expenses 59,360 Net operating income $ 132,115 The degree of operating leverage is closest to:
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Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 47,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Amount $ 1,250, 200 958, 800 $ 291,400 220,900 $ 70,500 Per Unit $ 26,60 20.40 $6.20 4.70 $ 1.50 Fixed costs included in this income statement are $305,500 for depreciation on plant and machinery and miscellaneous factory operations and $95,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20.20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production…
ulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 408,000 492,000 455,000 $ 37,000 Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $208,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $164,000 and $125,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $150,000 and…
ABC Corporation total breakeven point is 100,000 units. Its selling price is 100 and contribution margin is 40. During the year, the operating profit is 800,000. What is the total actual units sold during the year?
Green Valley Corp.'s contribution format income statement for the most recent month follows: Sales $ 506,000 Variable expenses 236,500 Contribution margin 269,500 Fixed expenses 241,700 Net operating income $ 27,800 Required: a. Compute the degree of operating leverage to two decimal places. b. Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 3% increase in sales. c. If Green Valley’s competitor Black Mountain Inc. has a degree of operating leverage as 8, which company has the higher operating risk?
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Bramble Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $217,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase net income.Compute the net income to be earned under each alternative.1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $enter a net income if the selling price is increased by 10% 2. Reduce variable costs to 55% of sales. Net income $enter a net income if the variable costs are reduced to 55% of sales 3. Reduce fixed costs by $18,000. Net income $enter a net income if the fixed costs are reduced by $18,000
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Rovinsky Corp, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $319,200 Variable Expenses 188,100 Contribution Margin 131,100 Fixed Expenses 106,500 Net Operating Income 24,600 Calculate the breakeven point in: a. sales units (round to the nearest whole unit) b. and sales dollars

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