Sillytime Park competes with Summer World by providing a variety of rides. Sillytime Park sells tickets at $60 per person as a one-day entrance fee. Variable costs are $24 per person, and fixed costs are $226,800 per month. The breakeven number of tickets is 6,300. If SillytimePark expects to sell 8,050 tickets, compute the degree of operating leverage (round to two decimal places). Estimate the operating income if sales increase by 20%.CBegin by selecting the formula labels and then entering the amounts to compute the degree of operating leverage for Sillytime Park. (Round the degree of operating leverage to two decimal places, X.XX.)Degree of operating leverage

The degree of operating leverage shows the change in the operating income as a result of change in…

Answered: Sillytime Park competes with Summer…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Outback Outfitters sells a small camp stove for $150 per unit. Variable expenses are $105 per unit, and fixed expenses total $184,500 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume the fixed expenses remain unchanged.) 3. At present, the company is selling 10,000 stoves per month. The sales manager is convinced a 10% reduction in the selling price would result in a 25% increase in unit sales. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $79,000 per month? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Break-even…
Sunland Orthotics Company distributes a specialized ankle support that sells for $ 40. The company’s variable costs are $ 30 per unit; fixed costs total $ 320,000 each year. Calculate contribution margin ratio. Contribution margin ratio =25% If sales increase by $ 52,000 per year, by how much should operating income increase? (Use the rounded contribution margin ratio calculated in the previous part.) Change in operating income?
Fruit Computer Company makes a fruit themed computer. Variable costs are $200 per unit, and fixed costs are $31,000 per month. Fruit Computer Company sells 500 units per month at a sales price of $320. The company believes that it can increase the price if the computer quality is upgraded. If so, the variable cost will increase to $230 per unit, and the fixed costs will rise by 25%. The CEO wishes to increase the company's operating income by 10%. Which sales price level would give the desired results? (Round your answer to the nearest cent.) O $371.30 per unit O $262.00 per unit O $378.00 per unit. O $1056.00 per unit < Previous
Selling price is $120 per unit. Variable costs are $78 per unit. Fixed expenses are $249,480 per month. The company is currently selling 6,000 units. The marketing manager believes it can increase sales revenue per unit to $130. It is also increase advertising by $10,000 increase in the monthly advertising budget would result in a 10 percent increase in monthly sales. If these changes are made, what is the net income expected to become? This time you have to calculate total Net Income.
Wildhorse's managers have determined that variable costs per unit will increase by 16% beginning next month. To offset this increase in costs, they are considering a 10% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Wildhorse sells. What will be Wildhorse's expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to O decimal places, eg. 5,275.) Operating income %24
Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. Required: 1. Compute the company’s break-even point in number of lanterns and in total sales dollars. 2. Compute the company’s Margin of Safety in sales dollar and in percentage. 3. At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. 4. Refer to the data in (3) above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?
United Snack Company sells 50-pound bags of peanuts to university dormitories for $5 a bag. The fixed costs of this operation are $60,000, while the variable costs of peanuts are $.5 per pound. a. What is the break-even point in bags? b. Calculate the profit or loss on 18,000 bags. c. What is the degree of operating leverage at 20,000 bags ? d. If United Snack Company has an annual interest expense of $10,000, and EBIT $80.000, calculate the degree of financial leverage at 18,000. e. What is the degree of combined leverage at both sales level
In an attempt to improve the company's profit performance, management is considering a number of alternative actions.Instructions:Determine the effect of each of the following on monthly profits. Each situation is to beevaluated independently of all others.1.Reduce the unit selling price by P2 per unit. Action will increase monthly sales by20,000 units. Fixed factory overhead will increase by P16,000.
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains? a. Break-even point b. Margin of safety chains chains

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