Answer:
Results are below.
Explanation:
Giving the following information:
The company has a ball that sells for $25.
Unitary variable cost= $15.00
Fixed expenses 263,000
<u>To calculate the contribution margin ratio, we need to use the following formula:</u>
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Contribution margin ratio= contribution margin / selling price
Contribution margin ratio= (25 - 15) / 25
Contribution margin ratio= 0.4
<u>Now, the break-even point in units:</u>
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 263,000 / 10
Break-even point in units= 26,300 units
Degree of operating leverage= contribution margin / operating income
Degree of operating leverage= 360,000 / 97,000
Degree of operating leverage= 3.71
<u>If the unitary variable cost increases by $3:</u>
Contribution margin ratio= (25 - 18) / 25
Contribution margin ratio= 0.28
Break-even point in units= 263,000 / 8
Break-even point in units= 32,875
