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?

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?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 23MC: If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month,...

See similar textbooks

Related questions

Q: TimberTech, Inc. manufactures power drills that sell for $85. Each power drill uses $18 in direct…

A: Provided Data:Selling price per drill = $85 (not needed for cost calculation, but good…

Q: I am searching for the correct answer to this general accounting problem with proper accounting…

A: Step 1: Define Degree of Operating LeverageDegree of Operating Leverage (DOL) measures how a change…

Q: How much of this will appear on the income statement after tax?

A: Step 1: Definition of After-Tax LossAn after-tax loss is the net financial impact of a loss after…

Q: For the year ended December 31, 2020, Malek Inc. earned an ROI of 12.5%. Sales for the year were $25…

A: Step 1: Definitions Concept of Return on Investment (ROI):Return on Investment (ROI) is a measure of…

Q: Crane Inc. reports: • Net Income $250 million Average Total Assets = $2,500 million What is the ROA?

A: Step 1: Definition of ROA (Return on Assets)Return on Assets (ROA) measures how efficiently a…

Q: The standard materials cost to produce 1 unit of Product S is 5 pounds of material at a standard…

A: Concept of Standard Cost:The standard cost is a predetermined or estimated cost to produce a unit of…

Q: Step by step solution

A: Concept of Inventory:Inventory refers to the goods and materials a business holds for the purpose of…

Q: What is the average cost per scooter with overhead ?

A: Provided Data:Monthly production = 160 scootersDirect cost per scooter = $1,875Monthly overhead =…

Q: Accounting questions

A: Step 1: Definition of Equity Multiplier The Equity Multiplier is a financial leverage ratio that…

Q: General accounting

A: Step 1: Definition of Total Asset TurnoverTotal Asset Turnover measures how efficiently a company…

Q: Your plant produces 100 snowmobiles per month. Direct costs are $2,300 per snowmobile. The monthly…

A: Explanation of Direct Costs:Direct costs are expenses that can be directly traced to the production…

Q: Compute the company's assets turnover for 2022.

A: Provided Data:Beginning total assets = $1,120,000Ending total assets = $1,280,000Net sales =…

Q: Please provide the answer to this general accounting question using the right approach.

A: Step 1: Define Cost of Merchandise SoldCost of Merchandise Sold (COMS) is the total cost incurred by…

Q: How much was the cost of goods sold?

A: Explanation of Cost of Goods Sold (COGS):Cost of Goods Sold represents the direct costs a business…

Q: I need help finding the accurate solution to this general accounting problem with valid methods.

A: Step 1: Define Total Manufacturing CostTotal manufacturing cost includes all costs directly…

Q: I am trying to find the accurate solution to this general accounting problem with appropriate…

A: Step 1: Definition of Cash Paid for Utilities Cash paid for utilities refers to the amount of cash a…

Q: Accurate Value Hardware began in 2019 with a credit balance of $47,000 in the allowance for sales…

A: Explanation of Sales Revenue:Sales revenue refers to the total amount generated from selling goods…

Q: Ggzhzbdhhdd jdhdjd kssjjd

A: Part 3: Materials Quantity VarianceStandard quantity allowed = 5,600 products × 6 lbs = 33,600…

Q: Need help in this problem qui

A: 1. Understand the base data from Taylor's operationsTaylor's current financial information (before…

Q: Please show me the correct approach to solving this financial accounting question with proper…

A: Concept of Accounts Receivable Turnover Ratio:The accounts receivable turnover ratio measures how…

Q: Solve this accounting problem

A: Explanation of Process Time:Process time is the amount of time spent actually working on the product…

Q: Please help me solve this financial accounting problem with the correct financial process.

A: Step 1: Define Operating CycleThe operating cycle is the total time a company takes to convert its…

Q: Maple Co. estimated its annual manufacturing overhead at $300,000 based on 15,000 direct labor…

A: Step 1: Definition of Applied OverheadApplied overhead is the amount of manufacturing overhead that…

Q: what are the inventory days of supply?

A: Step 1: Definition of Inventory Days of SupplyInventory Days of Supply (also known as Days Inventory…

Q: Which accounting principle requires that expenses be matched with revenues in the period in which…

A: Explanation of Matching Principle: The matching principle is a fundamental accounting concept that…

Q: what was the firms 2015 operating cash flow (OCF) ??

Q: Can you solve this general accounting problem using accurate calculation methods?

A: Step 1: DefinitionsConcept of Direct Materials:Direct Materials are raw materials that can be…

Q: What is its working capital ??

A: Working Capital = Current Assets - Current Liabilities Given the information:Current Assets =…

Q: I need the correct answer to this general accounting problem using the standard accounting approach.

A: Concept of SalesSales refer to the total revenue a company earns from selling its goods or services…

Q: Compute the company's asset turnover for 2023.??

A: Step 1: Definition of Asset Turnover Asset Turnover is a key financial metric used to measure how…

Q: Please explain the solution to this general accounting problem with accurate principles.

A: Step 1: Define Gross Profit PercentageGross Profit Percentage is a profitability ratio that shows…

Q: Chapter 21 Homework i Saved You received partial credit in the previous attempt. 00 8 Exercise 21-3…

A: First, we need to identify the variable costs. From the given data, the variable costs are Direct…

Q: Please provide the accurate answer to this financial accounting problem using valid techniques.

A: Step 1: Define Stockholders' EquityStockholders' equity represents the owners' claim after all…

Q: White Co. incurs a cost of $17 per pound to produce Product X, which it sells for $25 per pound. The…

A: Cost before further processing = Joint cost =…

Q: Can you solve this general accounting problem using appropriate accounting principles?

A: Step 1: Define Plantwide Overhead RateThe plantwide overhead rate is a single overhead rate used…

Q: Sunshine Traders uses the accrual basis of accounting. If it provides services worth $5,000 in March…

A: Explanation of Accrual Basis of Accounting: The accrual basis of accounting is a method where…

Q: what is the company's P/E ratio? accounting question

A: Step 1: Definition of P/E RatioThe Price-Earnings (P/E) Ratio shows how much investors are willing…

Q: Please provide the correct answer to this general accounting problem using accurate calculations.

A: Step 1: Definition of Total Asset Turnover RatioThe total asset turnover ratio measures a company's…

Q: Which cost is classified as a product cost? (a) Selling expenses (b) Marketing expenses (c)…

A: Explanation of Product Costs: Product costs are expenses that are directly associated with…

Q: what was carter's net income for the year?

A: Step 1: Definition of Net IncomeNet income is the total profit of a business after all revenues have…

Q: What does selling price per unit need to be?

A: Explanation of Fixed Costs:Fixed costs are expenses that do not change with production volume within…

Q: I want the correct answer with accounting question

A: Step 1: Definition of Overhead Rate per Direct Labor HourOverhead rate per direct labor hour is a…

Q: A speaker manufacturer, Golding Audio, uses approximately 36,000 tweeter units annually. These…

A: Thus, the number of workdays in an order cycle for Golding Audio is 15. This means that an order…

Q: What was the value land purchase for cash?

A: To determine the value of land purchase for cash: The value of land purchase for cash = $350,000…

Q: Can you explain the correct approach to solve this general accounting question?

A: Step 1: Definition of Lower of Cost or Market (LCM)The lower-of-cost-or-market (LCM) rule requires…

Q: The per-unit standards for direct labor are 1.8 direct labor hours at $16 per hour. If, in producing…

A: Step 1: Calculate the standard direct labor costStandard direct labor hours per unit = 1.8…

Q: The gross profit for delta enterprises is?

A: Step 1: DefinitionsConcept of Gross Profit:Gross profit is the amount a company earns from sales…

Q: Can you solve this financial accounting question with accurate accounting calculations?

A: Step 1: Define Conversion PriceThe conversion price is the effective price per share at which a…

Q: Please provide the correct answer to this general accounting problem using valid calculations.

A: Step 1: Definition of Total Production CostTotal production cost includes both fixed and variable…

Q: Please give me answer with accounting question

A: Step 1: Definition of Price/Earnings (P/E) RatioThe Price/Earnings (P/E) Ratio is a valuation tool…

Question

I am looking for a step-by-step explanation of this financial accounting problem with correct standards.

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?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

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
If a firm has a contribution margin of $59,690 and a net income of $12,700 for the current month, what is their degree of operating leverage? A. 0.18 B. 1.18 C. 2.4 D. 4.7
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
Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its products from those of its competitors. Because of this strategy, you project that next year the firm will generate 6.0% revenue growth from price increases and 3.0% revenue growth from sales volume increases. Assume that the firms production cost structure involves strictly variable costs. (That is, the cost to produce each unit of product remains the same.) Should you project that the firms gross profit will increase next year? If you project that the gross profit will increase, is the increase a result of volume growth, price growth, or both? Should you project that the firms gross profit margin (gross profit divided by sales) will increase next year? If you project that the gross profit margin will increase, is the increase a result of volume growth, price growth, or both?
Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are $15,250. Delta Co.s tax rate is 36% and the company wants to earn $44,000 after taxes. What would be Deltas desired pre-tax income? What would be break-even point in units to reach the income goal of $44,000 after taxes? What would be break-even point in sales dollars to reach the income goal of $44000 after taxes? Create a contribution margin income statement to show that the break-even point calculated in B, generates the desired after-tax income.
Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing? 0.4 and 10% 2.5 and 10% 2.5 and 25% 5.0 and 50%
Klamath Company produces a single product. The projected income statement for the coming year is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. 2. Suppose 10,000 units are sold above break-even. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four decimal places, and round the sales revenue to the nearest dollar.) Suppose that revenues are 200,000 more than expected for the coming year. What would the total operating income be?
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Required: 1. What is Hammonds variable cost ratio? Its contribution margin ratio? 2. Suppose Hammonds actual revenues are 200,000 greater than budgeted. By how much will before-tax profits increase? Give the answer without preparing a new income statement. 3. How much sales revenue must Hammond earn in order to break even? What is the expected margin of safety? (Round your answers to the nearest dollar.) 4. How much sales revenue must Hammond generate to earn a before-tax profit of 130,000? An after-tax profit of 90,000? (Round your answers to the nearest dollar.) Prepare a contribution margin income statement to verify the accuracy of your last answer.
Suppose the company has just the opposite news and now expects unit sales for August, September, and October to be double (200%) the original estimates. What effect will this have on the company’s net income and borrowing? Explain your findings.
Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contribution margin. Company Bs fixed costs are $375,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why.