Answer:
The DRS's EBIT will be $205,920.
Explanation:
Degree of operating leverage measures how EBIT will change with change in sales
Degree of operating leverage (DOL) = % change in EBIT / % change in sales
In our case, DOL = 3.2x
Sales forecast = $300,000
Actual sales = $313,500
% change in sales = (Actual sales - forecast )/ forecast = (313,500 - 300,000) / 300,000
= 4.5%
EBIT forecast = $180,000
Now putting everything in DOL formula
3.2 = % change in EBIT / % change in sales = % change in EBIT / 4.5
% change in EBIT = 3.2 * 4.5
= 14.4%
Actual EBIT = Forecast *(1 + % change)
= 180,000*(1 + 0.014)
= $205,920
Therefore, The DRS's EBIT will be $205,920.
Answer:
C. Is top management committed to the study?
Explanation:
Yes, market research is very important for the organisations which can help them in finding new trends and patterns in their consumers, they can find out what are products which they need to launch further, which products are not performing well but the main question before starting the research process is that each and every single person of the organisation should take part in the whole process particularly the top level management should be agrees upon and committed to it otherwise the whole process will go in vain. Because when the top level will be committed, they not only by proving the resources needed for the research but also they will be happily implementing the research findings for the betterment of the organisation. Therefore, top management should be committed otherwise it will just be waste of time and efforts.
Answer:
Net purchases:
= Purchases - Purchase Returns and Allowances - Purchase Discount
= 500,000 - 14,000 - 9,000
= $477,000
Cost of goods sold:
= Net purchase + Freight-in
= 477,000 + 15,000
= $492,000
