I need both solution please .... Question 44. Operating Leverage. Natural Bodyworks (NB) produces the popular Ab Stretcherthat they sell for $200 per unit. NB's total fixed costs (fixed operating costs +depreciation) for the Ab Stretcher are $200,000.Their variable costs are $30 perunit. They are financed entirely by equity and face a 21% corporate tax rate. If salesincrease from 4,000 units to 5,000 units, what is the percentage increase in NOI?Question 55. Break-even point. NB's managers are concerned about the operating leverage ofthe Ab Stretcher project. Next year's forecast sales are 3,500 units and they wouldlike to know if The Ab Stretcher will be profitable at this sales level.The annual depreciation for the Ab Stretcher project is $100,000. Sales price is$200 per unit and variable cost per unit is $30. Fixed operating costs are $100,000per year and the tax rate is 21%.What is the break-even point?

Net Operating Income (NOI) is a measure of profitability that indicates the amount produced by the…

Answered: Question 4 4. Operating Leverage.…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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CVP; operating leverage; income statementRacine Tire Co. manufactures tires for all-terrain vehicles. The tires sell for $60, and variable cost per tire is $30; monthly fixed cost is $450,000.a. What is the break-even point in units and sales dollars?Break-even point in units: Break-even in sales dollars: b. If Ronnie Rice, the company’s CEO, wants the business to earn a pre-tax profit of 25 percent of revenues, how many tires must be sold each month? c. If the company is currently selling 20,000 tires monthly, what is the degree of operating leverage? d. 1. If the company can increase sales volume by 15 percent above the current level, what will be the increase in net income? What will be the new net income?New net income $ Increase in net income $ 2. Prove your calculations with an income statement.Note: Do not use negatives signs with your answers.
K (Operating leverage) The C. M. Quarles Distributing Company manufactures an assortment of cold air intake systems for high-performance engines. The average selling price for the various units is $650. The associated variable cost is $250 per unit. Fixed costs for the firm average $180,000 annually a. What is the break-even point in units for the company? b. What is the dollar sales volume the firm must achieve to reach the break-even point? c. What is the degree of operating leverage for a production and sales level of 3,000 units for the firm? (Calculate to three decimal places.) d. What will be the projected effect on earnings before interest and taxes if the firm's sales level should increase by 45 percent from the volume noted in part c? a. What is the break-even point in units for the company? units (Round to the nearest whole number)
Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000A ACalculate the contribution margin percentage. B. Calculate the selling price if variable costs are $16 per unit.c. Suppose 75 000 units are sold. Calculate the profit earned. D. Will the company be profitable if able to sell 30,000 units? Explain. c. What should the company do to increase its profit above break-even point?
PROBLEM SOLVING: (show step by step solution) Break-even and target profits. Analysis of the operations of FAST Company shows the fixed costs to be P200,000 and the variable costs to be P8 per unit. Selling price is P16 per unit. Derive the break-even point expressed in units. How many units must the firm sell to earn a profit of P280,000? What would profits be if revenue from sales were P2,000,000?
8. Frontier Corp. sells units for $41, has unit variable costs of $11, and fixed costs of $114,000. If Frontier sells 10,000 units, what is its degree of operating leverage? 0.62 1.99 1.75 1.61
B. C. D&R Corporation has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company's product line. The new item will have $9.52 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $26,880 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 16,000 units of the new product could be sold at a price of $15.50 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Complete this question by entering your answers in the tabs below. Required A Required B Management is considering adding a new product to the company's product line. The new item will have $9.52 of…
Louise Corp. has a contribution margin ratio of 27%, fixed costs of $48,870, and a profit of $39,420. What are total sales? Multiple Choice $327,000 $88,290 $23,838 $186,857
CVP analysis, margin of safety. Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: Compute the contribution margin percentage. Compute the selling price if variable costs are $16 per unit. Suppose 75,000 units are sold. Compute the margin of safety in units and dollars. What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?
ATech has fixed costs of $10.0 million and profits of $5 million. Its competitor, ZTech, is roughly the same size and this year earned the same profits, $5 million. However, ZTech operates with fixed costs of only $0.25 million but higher variable costs. Calculate the operating leverage for each firm. DOL ATech DOL ZTech
Mazoon Company's variable costs are 65% of the selling price and its fixed costs are $80,000. To realize profits of $20,000 from sales of 60,000 units, using the CVP equation, what would be the selling price per unit? O a. $1.66 O b. $4.76 O c. None of the given answers O d. $2.56 O e. $2.66 Company XYZ is producing and selling 2,500. At this level, the selling price per unit is $10, the variable expenses per unit is $7, and fixed expenses are $1,500.How much is the profit? a. $8,500 O b. $6,000 O c. $11,000 O d. $16,000 O e. $13,500
Breakeven analysis; target income (LO 1, 2) Reid Recreation Products sells the Amazing Foam Frisbee for $12. The variable cost per unit is $3; fixed costs are $36,000 per month. Required a.What is the annual breakeven point in units? In sales dollars? b.How many frisbees must Reid sell to earn $18,000 in operating income? c.What operating income must Reid earn to realize net income of $16,200, assuming that the company is in the 40% tax bracket? d.How many frisbees must Reid sell to earn $16,200 in net income?
Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000. Calculate the contribution margin percentage. Calculate the selling price if variable costs are $16 per unit. Suppose 75 000 units are sold, calculate the profit earned. Willo the company beprofitable if able to sell 30,000 units? Explain. What should the company do to increase its profit above break-even point.

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