Don't use AI Urban Styles is a retail store selling men's apparel. The variable cost per shirt is $25, and the sales priceis $45 per shirt. Urban Syles expects to sell 500,000 shirts this year, which would generate a before-taxprofit of $4,000,000. Additionally, the company received a $20,000 grant from the city to renovate itsbuilding. DOL? Nova Tech's partial income statement is provided as follows: Sales: $1,000,000Less: Variable costs: $500,000 Contribution Margin: $500,000 Less: Fixed costs: $250,000 One-TimeCharity Donation: $100,000 Net Operating Income: $250,000Requirement: What is Nova Tech's degree of operating leverage?Options:8.259.505.006.50

To calculate Nova Tech's Degree of Operating Leverage (DOL), we use the formula:DOL = Contribution…

Answered: Urban Styles is a retail store selling…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 39P

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Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted) ∙ The sales price of the T-shirts will be $9. ∙ Variable cost to manufacture will increase by one-third. ∙ Fixed costs will increase by 10%. ∙ The income tax rate of 40% will be unchanged. Sales for the coming year are expected to exceed last year's by 1,000 units. If this occurs, Dorcan's sales volume in the coming year will be: 23,400 units. 21,960 units. 22,600 units. 21,000 units.
Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: (CMA adapted)The sales price of the T-shirts will be $9. ∙ Variable cost to manufacture will increase by one-third. ∙ Fixed costs will increase by 10%. ∙ The income tax rate of 40% will be unchanged. The selling price that would maintain the same contribution margin ratio as last year is: $10.00. $8.25. $9.00. $9.50.
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Pens and Prints manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was $5,040. Donnelly's expectations for the coming year include the following: • The sales price of the T-shirts will be $9• Variable cost to manufacture will increase by one-third • Fixed costs will increase by 10%• The income tax rate of 40% will be unchanged. Sales for the coming year are expected to exceed last year's by 1,000 units. If this occurs, How much will be the sales revenue in the coming year?
Green Apparel is a retail men's clothing store. Green's variable cost is $18 per shirt, and the sales price is $38 per shirt. Green plans to sell 350,000 shirts for the year, and at this level, they would generate a before-tax profit of $2,100,000. Green Apparel also received a discount of 5% on their office furniture, which cost $10,000. What is the DCL at this volume level? Nara Industries presents its partial income statement as follows: Sales: $2,000,000 Less: Variable costs: $1,200,000 Contribution Margin: $800,000 Less: Fixed costs: $300,000 Additional Staff Bonuses: $25,000 Net Operating Income: $500,000 Requirement: What is Nara Industries' degree of operating leverage? Options: 5.66 2.90 2.67 3.05
1. If the company want to achieve target net income $800,000 and the tax rate is 30%, calculate how many units to be sold to achieve those targets? 2. The owner estimates that if he can spend an additional $75,000 towards sales promotion,sales in unit may increase by 30%. What should Mr. Budi’ decision be?
pp. Subject :- Accounting
Bright Fashions is a clothing store that sells men's shirts. Their variable cost per shirt is $22, and the sales price is $42. Bright Fashions plans to sell 450,000 shirts for the year, and they expect a before-tax profit of $3,000,000 at this volume. Additionally, they received an extra $15,000 from the sale of an old company vehide. What is the degree of operating leverage (DOL) at this volume level? Cosmos Enterprises provides the following partial income statement: Sales: $1,500,000 Less: Variable costs: $700,000 Contribution Margin: $800,000 Less: Fixed costs: $350,000 Maintenance Costs: $50,000Net Operating Income: $450,000 Requirement: What is Cosmos Enterprises' degree of operating leverage? Options: 1.57 4.38 1.86 2.00
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Campbell Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchases as well as replacement canopies. Campbell developed its business plan for the year based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $100,000. Campbell’s after-tax profit objective was $243,000; the company’s effective tax rate is 40 percent. While Campbell’s sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 350 units had been sold at the established price, with variable costs as planned, and it was clear that the after-tax profit projection for the year would not be reached unless some actions were taken. Campbell’s president assigned a management committee to analyze the situation and develop several…

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