Calculate actual degree of operating leverage

Assignment Help Financial Management

Reference no: EM132065286

Niko's manufacturing Income Statement is presented in the next table ( units sold 750,000)

Per Unit Total

Sales $48.00 $36,000,000

Variable Costs

Direct Materials $14.00 $10,500,000.00

Direct Labor $10.00 $7,500,000.00

Factor Overhead $3.50 $2,625,000.00

Selling $1.50 $1,125,000.00

Total Variable Cost $21,750,000.00

Fixed Cost

Overhead $5.27 $3,950,000.00

Selling $4.67 $3,500,000.00

Administrative $6.53 $4,900,000.00

Total Fixed Costs $12,350,000.00

Pre Tax Income $1,900,000.00

Required

Calculate Contribution Margin per unit

Calculate Contribution Margin Ratio

Calculate Break Even Point in units

Calculate Break Even Point in $sales

What is the actual % margin of safety in units?

What is the actual % margin of safety in $sales?

Calculate actual Degree of Operating Leverage

If Niko’s pretax income goal is 9 million, how much units the company needs to sale

If Niko’s pretax income goal is 9 million, how much will be the $sales

A new technology will increase the operations’ efficiency. This new technique will reduce the direct material cost per unit by $1.00 and the direct labor cost by $.50, but will increase the fixed overhead cost by 1.5 million. The company is considering the implantation of this new technology.

Using this new data:

Calculate Contribution Margin per unit

Calculate Contribution Margin Ratio

Calculate Break Even Point in units

Calculate Break Even Point in $sales

Calculate Degree of Operating Leverage (with sales of 750,000 units)

Is the new technology a good decision?

How you explain the change in degree of operating leverage?

Reference no: EM132065286

Questions Cloud

Licensing has become a more profitable venture : Licensing has become a more profitable venture for international companies because

Describe a health care barrier or issue that needs addressed : Describe a health care barrier or issue that needs addressed. Based on your Logic Model, present a brief summary of the health care barrier or issue presented.

How does archaeology inform us of our past : You are an anthropologist. Describe for me a marriage custom anywhere on the planet, different from western society.

Create a niche for their business operations : Businesses need to be innovative and creative to create a niche for their business operations. As competition is ever increasing

Calculate actual degree of operating leverage : Calculate Contribution Margin per unit. Calculate actual Degree of Operating Leverage. How you explain the change in degree of operating leverage?

What is data warehouse : What is data warehouse? How is it different from a transactional database?

Calculate the amount of liability : ABC Co. has 20 employees and each one is entitled to 30 days of annual paid vacation leave. Calculate the amount of liability at the end of 2015

The same average return as the market portfolio : You currently own a mutal fund that has a beta of 1 and pays the same average return as the market portfolio.

Describing how mobility occurs in each : Traditional career paths strictly emphasize upward mobility within an organization. How does mobility differ in organizations with innovative career paths?

User Account

All Pages