Swift Enterprises has sales of $500,000, variable costs are 70% of sales, and operating income is $75,000. What is the operating leverage? a. 0 b. 1.5 C. 2.33 d. 2
Q: Answer this question
A: Explanation of Straight-Line Depreciation:Straight-line depreciation is a method used to allocate…
Q: Determine the company's 2014 operating leverage.
A: Step 1: Identify Given ValuesSelling price per crate = $95Variable cost per crate = $78Fixed costs…
Q: Calculate equity multiplier, debt ratio and return on equity accounting question
A: Step 1: Definition of Key RatiosEquity Multiplier - Measures financial leverage and indicates how…
Q: What the answer? A.b. general accounting question
A: Step 1: Define Return on Assets (ROA):Return on Assets (ROA) is a financial ratio that measures a…
Q: Waiting for your solution general accounting question
A: Step 1: Define Rate of Return on Common Stockholders' EquityThe rate of return on common…
Q: Mercury Inc. had 30,000 units of ending inventory recorded at $9.50 per unit using FIFO method.…
A: Explanation of FIFO Method: First-In, First-Out (FIFO) is an inventory valuation method that assumes…
Q: hello teacher please solve account questions
A: Step 1: Definition of Beta and Risk PremiumBeta (β): Measures a stock's volatility relative to the…
Q: return on equity (ROE)? account question
A: Step 1: Definition of Return on Equity (ROE)Return on Equity (ROE) is a financial ratio that…
Q: If Ram Nation can give up one unit of future consumption and as a result increase its current…
A: To determine the real rate of interest, we can use the concept of the intertemporal budget…
Q: Subject: financial accounting
A: Step 1: Definitions The Cash Conversion Cycle (CCC) measures the time it takes for a company to…
Q: Do fast answer of this accounting questions
A: Step 1: Definition of Accrued Interest PayableAccrued interest payable refers to the interest…
Q: General accounting question
A: Step 1: Definition of LIFO ReserveLIFO Reserve represents the difference between inventory valuation…
Q: On January 1, 2023, Pharoah Ltd. had 702,000 common shares outstanding. During 2023, it had the…
A: Step 1:The weighted average number of shares outstanding is calculated by multiplying the number of…
Q: HELP
A: Calculation of Annual Depreciation using the Straight-Line MethodAnnual Depreciation = (Purchase…
Q: Calculate the amount of gross profit
A: Concept of Gross ProfitGross profit is the amount a company earns after subtracting the cost of…
Q: materials price variance for part XBEZ52 was.
A: Step 1: Definition of Materials Price VarianceStandard cost is defined as the amount that a company…
Q: The Suit Factory sells suits. Currently, it sells 20,000 suits annually at an average price of $150…
A: Given:Sale of lower-priced suits: 8,000Price of lower-price suits: $120Decrease in the sale of…
Q: How many units must be sold
A: Step 1: Definition of Target Sales Volume in UnitsTarget Sales Volume in Units refers to the number…
Q: Round the answer to the nearest cent
A: Calculate Common Equity:Common equity is 40% of total assets. Common Equity = 0.40 * Total Assets…
Q: Kindly help me with accounting questions
A: Step 1: Gross Profit is the amount left after paying cost of goods sold from sales revenue. Gross…
Q: A company reported total equity of $200,000 on its December 31, 2020, balance sheet. The following…
A: Step 1: Definition of Total AssetsTotal assets refer to the sum of all economic resources owned by a…
Q: Regent Corp uses the straight-line method. Assets purchased between the 1st and 15th of the month…
A: Explanation of Straight-Line Depreciation:Straight-line depreciation is a method used to allocate…
Q: hello tutor help this answer accounting
A: Step 1: Definition of Gross ProfitGross Profit is the difference between net sales revenue and cost…
Q: HELP
A: Step 1:The straight-line method is one of the methods to calculate the depreciation expense. It is…
Q: manufacturing cost
A: Step 1: Definition of Absorption CostingAbsorption costing is a method of costing in which all…
Q: A retail company reports the following financial data: • Revenue: $1,200,000 • Expenses: $800,000 •…
A: The Return on Equity (ROE) is calculated using the formula:ROE=(Average EquityNet Income)×100…
Q: If Ram Nation can give up one unit of future consumption and as a result increase its current…
A: This problem is related to the real interest rate and intertemporal consumption trade-off. The real…
Q: General accounting question
A: Step 1:Net income can be calculated using the formula of return on equity. Return on equity = Net…
Q: Brightwood Furniture provides the following financial data for a given period: Sales Amount ($) Per…
A: Let's solve the questions step by step. Part a: Contribution Margin (CM) Ratio The CM ratio is…
Q: What is the per-unit manufacturing cost under variable costing?
A: Concept of Variable CostingVariable Costing is an accounting method where only variable…
Q: How much was the company's ending inventory?
A: Explanation of Beginning Inventory: Beginning inventory represents the value of merchandise that a…
Q: Solve this Accounting Problem
A: Calculation of Net Cash Provided by Operations (using Indirect Method)Net Cash Provided by…
Q: Cariveh Co sells automotive supplies from 25 different locations in one country. Each branch has up…
A: complete answer with explanation is provided in the answer section.Follwing are the references for…
Q: Do fast answer of this general accounting question
A: Step 1: Definition of Relevant Cost AnalysisRelevant cost analysis is a decision-making approach…
Q: Want Answer
A: we use the Price-to-Earnings (P/E) ratio formula:P/E Ratio = Market Price per Share ÷ Earnings per…
Q: Accurate Answer
A: Step 1: Introduction to property, plant and equipmentProperty, plant, and equipment refers to those…
Q: Example: Topic/Subtopic Research and development costs for software 985 Cash and cash equivalents…
A: Here is the completed table with the correct Accounting Standards Codification (ASC)…
Q: answer ?? General accounting
A: Step 1: Define Contribution Margin per UnitThe contribution margin per unit is the amount remaining…
Q: Anant Enterprises has sales of $750, total assets of $450, and a debt/equity ratio of 1.80. If its…
A: Step 1: Net income can be calculated using the formula of the return on equity (ROE). Return on…
Q: Compute the total, price, and quantity variance for materials?
A: Step 1: Definition of Material VariancesMaterial variances are used in cost accounting to analyze…
Q: What is the amount of overapplied or underapllied overhead?
A: Calculate the predetermined overhead rateAn estimated rate is used to allocate factory overhead…
Q: Help this question accounting
A: Step 1: Definition of Manufacturing Overhead CostsManufacturing overhead costs are indirect costs…
Q: Provide Answer
A: a)We determine inventory by comparing how many bicycles were produced versus how many were…
Q: Serfass Corporation's contribution format income statement for July appears below: Sales Variable…
A: Step 1: Definition of Degree of Operating LeverageThe degree of operating leverage (DOL) measures…
Q: NO WRONG ANSWER
A: Step 1:Gain or loss on sale is calculated by using following formula Sale price - book value of…
Q: i need this question answer General accounting
A: Step 1: Define Special Order Contribution MarginA special order decision evaluates whether accepting…
Q: Assume Newcome pays no taxes on this project.??
A:
Q: Can you help me of this general accounting question
A: Step 1: Define Degree of Operating Leverage (DOL)The Degree of Operating Leverage (DOL) measures how…
Q: Please provide answer this accounting question
A: Step 1: Definition of Finished Goods Inventory & Cost of Goods SoldFinished Goods Inventory…
Q: General accounting question
A: Step 1: Definition of Return on Equity (ROE)Return on Equity (ROE) is a financial ratio that…
What is the operating leverage ?
Step by step
Solved in 2 steps with 1 images
- 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 5.7If 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. 4.7Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000 and a 20% contribution margin. Company Bs fixed costs are $500,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 25% increase in sales? Explain why.
- 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?Fire Company is a service firm with current service revenue of $900,000 and a 40% contribution margin. Its fixed costs are $200,000. Ice Company has current sales of $420,000 and a 30% contribution margin. Its fixed costs are $90,000. What is the margin of safety for Fire and Ice? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 10% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 10%.Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
- Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by 10,000 and found that sales increased by 30,000. Was it a good decision to increase advertising expenses? Why is this simple problem an important one for businesspeople to understand?Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution margin. Its fixed costs are $80,000. Maldives Company has current sales of $6,610,000 and a 45% contribution margin. Its fixed costs are $1,800,000. What is the margin of safety for jaka rta and Maldives? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now, which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 15%.Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested assets of 180,000, and sales of 720,000. Use the DuPont formula to compute the return on investment and show (A) the profit margin, (B) the investment turnover, and (C) the return on investment.
- Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the return on investment for Division A? A. 20% B. 25% C. 33% D. 40%Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries? 0.42 and 2.2% 0.42and5% 2.4andl2% 2.Sandl3%Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?
