User Account

All Pages

Calculate the degree of operating leverage

Assignment Help Financial Accounting
Reference no: EM132997799

Question - Glory Engineering Ltd manufactures an engine vacuum cleaner called the "EAC". Cost and revenue data for the "EAC" are given below, based on sales of 50,000 units. Total Sales revenue $2,000,000 Less: variable costs $1,400,000 Contribution margin $600,000 Less: fixed costs $240,000 Net profit $360,000

Required -

(a) Calculate the break-even point in units AND in sales dollars.

(b) The company intends to increase promotion of its products by increasing its advertising budget by $60,000. As a consequence, sales units are expected to increase by 8,000. Calculate the net profit if these changes occur.

(c) How many units of product would the company have had to sell to earn a target net profit of $600,000?

(d) Determine the margin of safety (in dollars) based on the current sales level.

(e) Calculate the degree of operating leverage AND advise the management about the percentage increase in net profit if they estimate an increase of 10 percent on the sales revenue.

Reference no: EM132997799

Questions Cloud

Explain the four key risk categories : a. Identify and explain the four key Risk categories that Tommy and his father may face
Is jane acting in the best interests of sally : Sally was taking a walk with her friend Jane who was a Financial Advisor. They were both thinking of their long term future when Sally asked about an Insurance
What is the mean value of the stock price : What is the mean value of the stock price? Provide 95% confidence interval. What is the probability that stock price is higher than $60?
How much is the debit-credit to premium-discount : In the entry to accrue interest expense as of December 31, 2001, how much is the debit/credit to premium/discount
Calculate the degree of operating leverage : Calculate the degree of operating leverage AND advise the management about the percentage increase in net profit if they estimate an increase of 10 percent
Examine and apply appropriate business analytic techniques : Examine and apply appropriate business analytic techniques and methods, to inform responsive, evidence-based decision-making to improve performance
Journalise the required adjusting entries for the month : Shop rent of $2,100 has been paid on 1 July for the period up to the end of August. Journalise the required adjusting entries for the month
What should company do based on financial considerations : Based on financial considerations, what should the company do? An uninsured boat costing $96,000 was wrecked the first day it was used.
Explain the benefits of having a conceptual framework : Explain the benefits of having a Conceptual Framework for financial reporting. The Conceptual Framework is described as a coherent system of interrelated.

Reviews

Write a Review

Financial Accounting Questions & Answers

  1 identify the division that wwe should emphasize consider

1. identify the division that wwe should emphasize consider expanding in the near future. assume there are no selling

  What is the expected rate of return of the fifteen year

What is the expected rate of return of the 15-year, $1,000 par value bond paying 7 percent interest annually if its market price is $850?

  What was the total investment-related income

What was the total investment-related income that QFI should have reported on its income statement for the year ended December 31, 20X6, pertaining

  Compute the cost of preference capital

Bharathi Ltd., issues 4000 12% preference shares of Rs. 100 each at a discount of 5%. Costs of raising capital are Rs. 8000. Compute cost of preference capital

  What is the firm level of current liabilities

What is the firm's level of current liabilities? What is the firm's level of inventories? Do not round intermediate calculations. Round your answers to the near

  Prepare the relevant tax-effect journal entries

Prepare the relevant tax-effect journal entries at the end of 30 June 2018, 2019, and 2020. The tax rate is 30%

  What are the expected net percentage returns on each stock

What are the expected net percentage returns on each stock to a pension fund that does not pay taxes, a corporation paying tax at 21%

  Calculate pension expense for 2016 and 2017

Calculate Pension expense for 2016 and 2017 and Prepare the journal entries for 2016 and 2017 to record pension expense

  What issues may have been included in a management letter

What issues may have been included in a management letter to your SEC 10-K company based on issues you have identified this semester

  Data set with the mean and median close to begin equal

A data set with the mean and median close to begin equal will have a shape that is roughly symmetrical. Outliers are numbers that fall in the middle of the data set within one standard deviation of the mean. Variation is one of the most important con..

  What is your best strategy for playing

Suppose you have $10, and are going to play until you go broke or have $20. What is your best strategy for playing

  Create income statement for the year

Create income statement for the year. The adjusted account balances of Pina Colada Corp. at December 31, 2017 includes accounts

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd