Operating income for PQR company is $20,000, variable cost per unit is $6, number of units sold are 10,000 and sales price per unit is $10, degree of operating leverage for PQR will be: Select one: a. 2 times b. 4 times c. 3 times d. 1.5 times

Operating income for PQR company is $20,000, variable cost per unit is $6, number of units sold are 10,000 and sales price per unit is $10, degree of operating leverage for PQR will be: Select one: a. 2 times b. 4 times c. 3 times d. 1.5 times

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: crease by 5,800 units? a. $81,200 increase b. $152,600 increase $54, the unit variable costs are…

A: Answer : Calculation of operating income change if sales volume increase by 5800 units : Operating…

Q: 210

A: Given: To calculate the operating leverage degree as,

Q: Celine Co. generates sales of P 500,000. Variable cost is 25% and fixed cost isP 75,000. Compute:…

A: Introduction:- The following formula used to calculate as follows:- Degree of Operating Leverage =…

Q: Assume the following: 1. variable expenses = $294,000 2. unit sales = 10,000 3. the contribution…

A: Break-even point is the point of production where total cost is equal to total revenue. Break-even…

Q: Bristo Corporation has sales of 1,250 units at $60 per unit. Variable expenses are 40% of the…

A: Formula used : Degree of operating leverage = Contribution margin / ( Contribution margin - fixed…

Q: Prius motorparts company is currently operating at 80% capacity level. The production under normal…

A: Normal production capacity=150,000 units Capacity =80% Variable cost per unit=RM14 Fixed…

Q: Spice Inc.'s unit selling price is $50, the unit variable costs are $36, fixed costs are $118,000,…

A: Operating Income A company's gross income, which is equal to total revenue less cost of products…

Q: Spice Inc.'s unit selling price is $53, the unit variable costs are $34, fixed costs are $101,000,…

A: Income statement is a financial statement that shows the profitability, total revenue and total…

Q: Log Co has an operating gearing ratio of 33.33%. Its sales are currently $100m and its operating…

A: The operating gearing ratio, also known as the operating leverage ratio, measures the extent to…

Q: Are operating leverage Beck Inc. and Bryant Inc. have the following operating data back Inc. sales…

A: Operating Leverage: It's a metric for determining how resilient net operating income is to a jump in…

Q: Erwin Ltd. is having the following information. Calculate financial leverage, operating leverage and…

A: Sales = 5000 units at $ 10 each Variable cost = $ 6 per unit Fixed Cost = $ 100000 Interest = 8% of…

Q: If sales are $797,000, variable costs are 80% of sales, and operating income is $201,000, what is…

A: Contribution margin is computed by subtracting the variable costs from sales. Contribution margin…

Q: Company A has current sales of $4.000.00 and a 45% contribution margin. Its fixed costs are…

A: Formula: Degree of operating leverage = Total Contribution margin / net income

Q: A company has provided the following data: Sales Sales price Variable cost Fixed cost If the dollar…

A: There are two type of costs incurred in the business. One is fixed costs and other is variable…

Q: Information concerning Ysabel Lopez Corporation’s Product CUP is as follows: Sales: 300,000 Fixed…

A: Operating leverage is defined as degree to which firm used fixed cost in its operations. It can be…

Q: If sales equal $351,050, variable expenses equal $200,000, and the degree of operating leverage is…

A: Net operating income = (Sales - Variable costs) / Degree of operating leverage

Q: Blane Company has the following data: Total sales $800,000 Total variable costs $300,000 Fixed costs…

A: Selling price per unit = Total sales / Number of units sold Variable cost per unit = Total Variable…

Q: 2. A firm has the capacity to produce 924,230 units of a product each year. At present, it is…

A: The price for each unit is $1.45.Explanation:To find the price for each unit, we need to use the…

Q: Frontier Corp. has a contribution margin of $1,682,000 and profit of $336,400. What is its degree of…

A: Degree of operating leverage is one of the important ratio between contribution margin and net…

Q: Bristo Corporation has sales of 1,500 units at $50 per unit. Variable expenses are 40% of the…

A: Degree of operating leverage measure the change in net income due to change in the sales revenue.

Q: Hang Kyuk Company has sales of P 200,000, variable costs of P 100,000 and fixed costs of P 75,000.…

A: Cost-volume-profit analysis: Cost-volume-profit analysis is a technique that is used to determine…

Q: If sales are $314,000, variable costs are 75% of sales, and operating income is $44,100, the…

A: Operating leverage means the measurement between the contribution margin with the earning of the…

Q: A company has provided the following data: Sales 2,000 units Sales price $50/unit Variable cost…

A: Variable costs are costs which changes along with change in sales activity level. Fixed costs do not…

Q: If sales are $309,000, variable costs are 75% of sales, and operating income is $36,000, the…

A: Operating Leverage = Contribution Margin / Operating Income Operating Income is given, so we only…

Q: What is operating leverage for the info attached? 1.3, 2.7 or 6.7

A: Operating Leverage = Contribution margin/Profit

Q: Just A Company (JAC) 225 units at $100 per unit Variable cost $20 per unit Contribution margin =…

A: Cost volume profit analysis is the technique used by management for decision-making. The methods…

Q: XYZ company expects the following in the next month: sales volume 50,000 units, contribution margin…

A: Degree of operating leverage (DOL): DOL reflects the variable and fixed cost relationship of an…

Q: If sales are $277,000, variable costs are 75% of sales, and operating income is $51,700, the…

A: Operating leaverage can be calculated by dividing contribution with operating income.

Q: Mazoon Company's variable costs are 65% of the selling price and its fixed costs are $80,000. To…

A: As the questions asked have more than 1 question, the first question is answered. If you want the…

Q: Spice Inc.'s unit selling price is $53, unit variable costs are $37, fixed costs are $119,000, and…

A: Income from operation :— It is the income earned from operating business. It is the difference of…

Q: Frontier Corporation has a contribution margin of $512,000 and net operating income of $128,000.…

A: The leverage ratio known as the degree of operational leverage (DOL) is used in operating analysis…

Q: A company has fixed costs of P150,000, a variable cost ratio of 60%, and a margin of safety ratio of…

A: Here, Fixed costs = P150,000 Variable cost ratio = 60% Margin of safety ratio = 25% Find: Amount of…

Q: The following data are available for X Company: • Ave Selling price of 16 per unit…

A: The contribution margin is calculated as difference between sales and variable costs. The operating…

Q: • Use the below information to fill out the income statement and answer the questions 4-10 below:…

A: Net income is the amount of profit or loss which is computed by deducting the costs from the total…

Q: Assume the following information: Sales Variable expenses Contribution margin Fixed expenses Net…

A: Cost volume profit analysis is the technique used by management for decision-making. The methods…

Q: Assume the following cost information for Standard Corporation: Selling price per unit Variable…

A: The Break-even point indicates that total units are to be sold by the business entity to recover its…

Q: Actual operating results for the shop are presented below: S 250,000.00 VC 100,000.00 CM…

A: Degree of Operating Leverage (DOL) is a measure which is used by the business to determine the…

Q: If sales are $325,000, variable costs are 75% of sales, and operating income is $45,600, what is the…

A: Degree of operating leverage is calculated by dividing contribution margin by net income.…

Q: Consider the following information from the income statement of Leighton Company: Contribution…

A: Break-even point (BEP): Breakeven is the point where total expenses are equal to total revenue. At…

Q: The sales and cost data for two companies in the transportation industry are as follows: X…

A: CVP analysis is used to identify the changes in costs and volume affect a company's operating…

Q: The company DELTA provides the following information for the year 20X9: Sales 100,000 euros Variable…

A: Operating leverage indicates the ability of the business to manage the fixed and variable costs to…

Q: Bonita Industries has sales of $1200000, variable costs of $550000, and fixed costs of $300000.…

A: Contribution margin=Sale-Variable cost=$1,200,000-$550,000=$650,000

Q: 12.19 The Emmon Company's normal sales volume is 500,000 units. The unit cost to mako sell the…

A: Selling price per unit is calculated by adding the desired profit percentage to the total per unit…

Q: Louise Corp. has a contribution margin ratio of 27%, fixed costs of $48,870, and a profit of…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Question

Operating income for PQR company is $20,000, variable cost per unit is $6, number of units sold are 10,000 and sales price per unit is $10, degree of operating leverage for PQR will be:

Select one:

a. 2 times

b. 4 times

c. 3 times

d. 1.5 times

Expert Solution

Step 1

Unit Contribution margin

= Selling price - Unit Variable cost

= $10 - $6

= $4

Contribution margin

= Unit Contribution margin x Units sold

= $4 x 10,000

= $40,000

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

3. Breakeven point analysis Our company's activity is characterised by the following basic information: 15000 pcs 320 $/pc 440 $/pc Quantities produced (Q): Variable cost /unit (vc): Price (P): 20% of the total cost is fixed cost a) Determine the breakeven point of the business! b) What should be the volume of production to ensure a profit of 450 000 $?
Wiles Inc.'s unit selling price is $40, the unit variable costs is $30, fixed costs are $80,000, and current sales are 10,000 units. How much would operating income change if sales increase by 4,000 units? a. $100,000 increase b. $40,000 increase c. $80,000 decrease d. $60,000 decrease
Management anticipates fixed costs of $73,000 and variable costs equal to 47% of sales. What will pretax income equal if sales are $330,000? Multiple Choice $196,050. $257,000. $155,100. $101,900. $82,100.
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
Use the below information to answer the following question. Sales (1,000 units) $ 200,000 Variable costs 110,000 Contribution margin 90,000 Fixed manufacturing costs 40,000 Operating income 50,000 Interest 10,000 Earnings before taxes 40,000 Taxes (30%) 12,000 Net income $ 28,000 Shares Outstanding 1,000 Refer to the table. The degree of financial leverage (DFL) is _____.
Solve this question with steps. The subject is Managerial Accounting.
If sales are $325,000, variable costs are 75% of sales, and operating income is $49,200, the operating leverage is A. 5.0 B. 0.0 C. 1.7
If sales are $295,000, variable costs are 75% of sales, and operating income is $51,500, the operating leverage is a.4.3 b.1.1 c.1.4 d.0.0
HELP
Calculate the Operating Leverage for a business given the following data: Sales = $300,000.00 Variable Costs = 75% of Sales Operating Income = $40,000.00 Group of answer choices a. 0 b. 7.500 c. 1.875 d. 1.333
Munabhai
need help