Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Sales revenue Less: Variable cost Contribution margin Less: Fixed cost Net operating income Required: Before Automation $ 206,000 90,000 $ 116,000 14,000 $ 102,000 After Automation $ 206,000 40,000 $166,000 63,000 $ 103,000 1. Calculate Lobster Trap's break-even sales dollars before and after automation. 2. Compute Lobster Trap's degree of operating leverage before and after automation. Complete this question by entering your answers in the tabs below. Required 1 Required 2

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed
automation follows:
Sales revenue
Less: Variable cost
Contribution margin
Less: Fixed cost
Net operating income
Required:
Before
Automation
$ 206,000
90,000
$ 116,000
14,000
After
Automation
$ 206,000
40,000
$ 166,000
63,000
$ 102,000
$ 103,000
1. Calculate Lobster Trap's break-even sales dollars before and after automation.
2. Compute Lobster Trap's degree of operating leverage before and after automation.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Transcribed Image Text:Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Sales revenue Less: Variable cost Contribution margin Less: Fixed cost Net operating income Required: Before Automation $ 206,000 90,000 $ 116,000 14,000 After Automation $ 206,000 40,000 $ 166,000 63,000 $ 102,000 $ 103,000 1. Calculate Lobster Trap's break-even sales dollars before and after automation. 2. Compute Lobster Trap's degree of operating leverage before and after automation. Complete this question by entering your answers in the tabs below. Required 1 Required 2
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