Hello tutor please provide correct answer general Accounting question Firm A produced 5,000 units last year, fixedcosts were $50,000, selling price was $75,and the variable unit cost was $55. What wasthe firm's degree of operating leverage(DOL)? If Sales increase by 5%, what will bethe effect on EBIT?

Step 1: Define Selling PriceSelling price indicates the value of money which must be paid to get a…

Answered: Firm A produced 5,000 units last year,…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 10P

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If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month, what is their degree of operating leverage? 0.21 1.21 2.4 5.7
Accounting EBIT?
(Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $150,000 and net operating income of $34,000. If sales increase by 18 percent, by how much will the firm's NOI increase? What would happen to the firm's NOI if sales decreased by 21 percent? If sales increase by 18%, the change in the firms NOI will be (a decrease or increase) of _ %
Unit sales are expected to reach 30,000 per year, the price per unit is expected to be $60, variable costs are $40 per unit and fixed costs are $90,000 per year. The company pays $250,000 in interest per year. What is the degree of operating leverage at the expected levels? What is the degree of financial leverage at the expected levels? What is the degree of total leverage at the expected levels? What is the expected percentage change in EPS if unit sales turn out to be 10,000 lower than expected?
Unit sales are expected to reach 25,000 per year, the price per unit is expected to be $70, variable costs are $40 per unit and fixed costs are $100,000 per year. What is the degree of operating leverage at the expected levels? Using the degree of operating leverage, what is the expected percentage change in EBIT if unit sales turn out to be 6,000 lower than expected?
(Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $120,000 and net operating income of $29,000. If sales increase by 17 percent, by how much will the firm's NOI increase? What would happen to the firm's NOI if sales decreased by 20 percent? If sales increase by 17%, the change in the firm's NOI will be of %. (Select from the drop-down menu and round to two decimal places.) If sales decrease by 20%, the change in the firm's NOI will be of %. (Select from the drop-down menu and round to two decimal places.)
Consider the previous question with the following new information: Fixed costs are assumed to be $550,000 per year. The company estimates the variable cost per unit (v) to be $120 and expects to sell each unit for $ 425. There are no taxes and the required rate of return is 17% per year. Suppose that sales are currently estimated to be 5400 units per year. What is the degree of operating leverage? Blank 1. Fill in the blank, read surrounding text. (Round to the CLOSEST 1 decimal place, ie 2.3) Using your answer from above, ESTIMATE what the new annual operating cash flow (OCF) will be if sales increase by 150 units: $ Blank 2. Fill in the blank, read surrounding text. (Round your answer to the nearest $1000, and do NOT use commas in your response, ie. 1234000)
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
Your business plan for your proposed start-up firm envisions first-year revenues of $120,000, fixed costs of $30,000, and variable costs equal to one-third of revenue.a. What are expected profits based on these expectations?b. What is the degree of operating leverage based on the estimate of fixed costs and expected profits?c. If sales are 10% below expectation, what will be the decrease in profits?d. Show that the percentage decrease in profits equals DOL times the 10% drop in sales.e. Based on the DOL, what is the largest percentage shortfall in sales relative to original expectations that the firm can sustain before profits turn negative?f. What are break-even sales at this point?g. Confirm that your answer to (f) is correct by calculating profits at the break-even level of sales.
1. If ABC company achieves its projections, what will be its degree of operating leverage?
The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $64.63. The variable cost per unit is $21.75, Poseidon Swim has average fixed costs per year of $7,993. Assume that current level of sales is 314 units. What will be the resulting percentage change in EBIT if they expect units sold to changes by -4.2 percent? (You should calculate the degree of operating leverage first). (Write the percentage sign in the "units" box). Round the answer to two decimal places.
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Firm A produced 5,000 units last year, fixed costs were $50,000, selling price was $75, and the variable unit cost was $55. What was the firm's degree of operating leverage (DOL)? If Sales increase by 5%, what will be the effect on EBIT?