I need answer of this question general accounting Tyrene Products manufactures recreational equipment. One of the company'sproducts, a skateboard, sells for $32. The skateboards are manufactured in anantiquated plant that relies heavily on direct labor workers. Thus, variable costs arehigh, totaling $22.40 per skateboard of which 70% is direct labor cost. Over the pastyear the company sold 45,000 skateboards, with the following operating results:Financial data for Tyrene Products Values in $Sales (45,000 skateboards)Variable expensesContribution margin1,440,0001,008,000432,000288,000144,000Fixes expensesNet operating incomeManagement is anxious to maintain and perhaps even improve its present level ofincome from the skateboards.The company is considering the construction of a new, automated plant. The newplant would slash variable costs by 20%, but it would cause fixed costs to increaseby 80%. Assume that the new plant is constructed and that next year the companymanufactures and sells 45,000 skateboards (the same number as sold last year).Prepare a contribution format income statement. Compute the degree of operatingleverage.Degree of operating leverage:

Step 1: Define Operating leverageOperating leverage is used to determine the impact of change in net…

Answered: Tyrene Products manufactures…

Principles of Accounting Volume 2

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Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...

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Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $22.50 per skateboard of which 60% is direct labor cost. Over the past year, the company sold 40,000 skateboards, with the following operating results: Sales (40,000 skateboards). Variable expenses. Contribution margin Fixed expenses Net operating income. $1,500,000 900,000 600,000 480,000 $120.000 Required: 1. Compute (a) the CM ratio and the break-even point in skateboards, and (b) the degree of operating leverage at last year's level of sales. (
Northwood Company manufactures basketballs. The company has a ball that sells for $36. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $21.60 per ball, of which 60% is direct labor cost. Last year, the company sold 59,000 of these balls, with the following results: Sales (59,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $2,124,000 1,274,400 CM Ratio Unit sales to break even 849,600 705,600 $ 144,000 Required: 1-a. Compute last year's CM ratio and the break-even point in balls. (Do not round intermediate calculations.) % balls 4 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) Degree of operating leverage
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost Last year, the company sold 33,500 of these balls, with the following results: Sales (33,500 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 837,500 502,500 335,000 229,600 $ 105,400 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in requirement 2. If the expected change in…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 56,000 of these balls, with the following results: Sales (56,000 balls) Variable expenses Contribution margin Fixed expenses $ 1,400,000 840,000 560,000 373,000 Net operating income $ 187,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, varlable expenses are high, totaling $15.00 per ball, of which 60% Is direct labor cost Last year, the company sold 62.000 of these balls, with the following results: Sales (62,809 balls) Variable expenses Contribution margin Fixed expenses $ 1,558, 000 930,e00 620, e00 426, e00 Net operating income $ 194,e00 Required: 1. Compute (a) last year's CM ratio and the break-even polnt In balls, and (b) the degree of operating leverage at last year's sales level. 2 Due to an Increase In labor rates, the company estimates that next year's varlable expenses will Increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt in balls? 3. Refer to the data in (2) above. If the expected change In…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 46,000 of these balls, with the following results: Sales (46,000 balls) $ 1,150,000 Variable expenses 690,000 Contribution margin 460,000 Fixed expenses 318,000 Net operating income $ 142,000 Required: 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? CM Ratio 28.00 % Unit sales to break even 45,429 balls 4. Refer again to the data in (2) above. The president feels that the company must…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball Is manufactured In a small plant that relles heavly on direct labor workers. Thus, varlable expenses are high, totallng $15.00 per ball, of which 60% Is direct labor cost. Last year, the company sold 58,000 of these balls, with the following results: $ 1,450,000 Sales (58,800 balls) variable expenses Contribution margin Fixed expenses 870,000 580,000 374,000 Net operating income 206,000 Required: 1. Compute (a) last year's CM ratio and the break-even polnt in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an Increase in labor rates, the company estimates that next year's varlable expenses will Increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt in balls? 3. Refer to the data in (2) above. If the expected change in varlable…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that reles heavily on direct labor workers. Thus, varlable expenses are high, totaling $15.00 per ball, of which 60% Is direct labor cost Last year, the company sold 62.000 of these balls, with the following results: Sales (62,809 balls) Variable expenses Contribution margin Fixed expenses $ 1,558, 000 930,e00 620, e00 426,e00 Net operating income $ 194, e00 Required: 1. Compute (a) last year's CM ratio and the break-even polnt In balls, and (b) the degree of operating leverage at last year's sales level. 2 Due to an Increase In labor rates, the company estimates that next year's varlable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt In balls? 3. Refer to the data in (2) above. If the expected change In…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured In a small plant that relies heavily on direct labor workers. Thus, varlable expenses are high, totaling $15.000 per ball, of which 60% Is direct labor cost Last year, the company sold 62.000 of these balls, with the following results: $ 1,558, 000 930, e00 Sales (62,889 balls) Variable expenses Contribution margin Fixed expenses 620,e00 426,000 $ 194, 000 Net operating income Required: 1. Compute (a) last year's CM ratio and the break-even polnt in balls, and (b) the degree of operating leverage at last year's sales level. 2 Due to an Increase in labor rates, the company estimates that next year's varlable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt in balls? 3. Refer to the data in (2) above. If the expected change in…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 BALLS) $750,000 Variable expenses (450,000) Contribution margin 300,000 Fixed expenses (210,000) Net operating income $ 90,000 Required: A) Compute (i) the CM ratio and (ii) the break-even point in balls . B) Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what will be the new CM ratio and break-even point in balls? Refer to the data in (b) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 34,000 of these balls, with the following results: Sales (34,000 balls) $ 850,000 Variable expenses 510,000 Contribution margin 340,000 Fixed expenses 212,000 Net operating income $ 128,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2)…
Northwood Company manufactures basketball and they have a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling %15 per ball, of which 60 percent is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: Sales $750,000 Variable expenses (450,000) Contribution margin 300,000 Fixed expenses (210,000) Net operating income $ 90,000 Required: 1. Compute the CM ratio and the break-even point in quantity of balls. 2. Compute the degree of operating leverage at last year?s sales level. 3. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what will be the new CM ratio and break-even point in quantity of balls? 4. Refer to the data in (3) above. If the expected change in…

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