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AURORKA [14]
3 years ago
15

Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that w

as popular in the 1930s. The retro-look cycle would be sold for $14,000 and at that price, Thad estimates 600 units would be sold each year. The variable cost to produce and sell the cycles would be $9,800 per unit. The annual fixed cost would be $1,890,000.
a. What is the break-even in unit sales?
Break-even in unit sales
b.
What is the margin of safety in dollars (Omit the "$" sign in your response.)


Margin of safety in dollars $
c. What is the degree of operating leverage? (Round your answer to 2 decimal places.)
Degree of operating leverage
Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the Western Hombre would have to be reduced to $11,000 to compete effectively. In that event, Thad would also reduce fixed expenses to $1,456,000 by reducing advertising expenses, but he still hopes to sell 600 units per year.
d. What would the net operating income be in this situation? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)
Business
1 answer:
AleksandrR [38]3 years ago
5 0

Answer:

Explanation:

a. Break even in unit sales =  (Fixed expenses ) ÷ (Contribution margin per unit)

= $1,890,000 ÷ ($14,000 - $9,800)

= 450  units

b. Margin of safety = Expected sales - break even sales

= ($14,000 × 600) - ($14,000 × 450)

= $2,100,000

Contribution margin  = Sales - Variable cost

= ($14,000 × 600) - ($9,800 × 600)

= $2,520,000

Profit before earning and tax  = Contribution margin - Annual fixed cost

= $2,520,000 - $1,890,000

= $630,000

c. Degree of operating leverage = Contribution ÷  Profit before earning and tax

= $2,520,000 ÷ $630,000

= 4

d. Loss on Net operating income = (Sales) - (Variable cost) - Fixed expenses

=($11,000 × 600) - ($9,800 × 600) - $1,456,000

= -$736,000

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Firdavs [7]

Answer:

cost-benefit analysis

Explanation:

such analysis is based on the cost and benefits of attending a collage.

4 0
3 years ago
The cost accountants at the Doering Company regressed total overhead costs and direct labor hours for the past 30-months and rep
taurus [48]

Answer:

The estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period is $9,882.11

Explanation:

In order to calculate the estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period we would have to make the following calculation:

Cost for 225 direct labor hours = Intercept + Slope*225

Cost for 225 direct labor hours=$596.36+ ($41.27*225)

Cost for 225 direct labor hours=$9,882.11

The estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period is $9,882.11

7 0
3 years ago
What does a higher accounts receivable turnover ratio indicate? A) the company collects its short-term debts efficiently. B) com
____ [38]
I would say A

Hope this helps

~Jordan~
7 0
3 years ago
Because services are inseparable, they cannot be tried before they are purchased. To counteract this, a service firm might:
Marina CMI [18]

Answer:

A, Offer a guarantee for the customer's complete satisfaction.

Explanation:

SInce services are inseperable beacuse there cannot be trials unlike in some goods, the only way to keep a customer's mind at rest over the service he or she is getting to give a guarantee as to the quality of the service such that the customer is satisfied and can purchase the service.

For example, giving a customer a time frame for the durability of a service and also a consideration for re-service before the set or supposed time is a way of giving customer guarantee about a service he or she is purchasing

.

Cheers.

3 0
3 years ago
What percentage profit is made on a sale if the selling price is $225,000 and the purchase price is $190,000?
IgorLugansk [536]

The percentage profit = 18%

A profit is made on sale with selling price more than the purchasing price. The purchasing price is also known as the cost price.

Given the selling price = $225000

and the purchasing price = $190000

Since the selling price is more than the purchasing price, there is obviously a profit gained.

Now profit amount = Selling price - Purchasing price

                                = 225000-190000 = $35000

Profit percentage = (Profit / Purchasing price) x 100%

                             = (35000 / 190000) x 100%

                             = 18.42%

Learn more about profit at brainly.com/question/19104371

#SPJ4

5 0
2 years ago
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