Determine the new degree of operating leverage

Assignment Help Financial Accounting

Reference no: EM13751848

Olympia Company’s variable expenses are 60% of sales. At a $600,000 sales level, the degree of operating leverage is 4. The company's chief executive officer has decided to purchase and install a new automated assembly line that will increase the company's fixed expenses by 80% but will reduce variable expenses per unit of product by 40%. Assuming that the sales level remains the same and the change will not affect the sales price, determine the new degree of operating leverage after the new assembly is installed

Reference no: EM13751848

Questions Cloud

What is the amount of cost of goods sold : A company has net sales of $1,842,000, sales commissions of $195,000, net income of $367,400, and the gross profit ratio of 65%. What is the amount of cost of goods sold?

How many trees must be sold annually to break even : Dickens Co. sells three styles of Christmas trees - past, present and future. Fixed costs total 3,900 per year. The following information is available:

Fundraiser to benefit various environmental causes : Thoreau co. is planning a fundraiser to benefit various environmental causes. all proceeds in excess of costs will be donated to these causes. the planning committee has developed the following budget for the event: ballroom rental: 1900 entertainmen..

Modify the program by creating a separate class : Modify the program by creating a separate class called ProcessShipping to calculate the shipping charge for each package

Determine the new degree of operating leverage : Olympia Company’s variable expenses are 60% of sales. At a $600,000 sales level, the degree of operating leverage is 4. The company's chief executive officer has decided to purchase and install a new automated assembly line that will increase the com..

Explain the importance of managers and management : What does this story illustrate about the importance of managers and management. Do you think this relationship would be just as important in other types of businesses i.e., non-fast-food businesses. Explain.

Compute the amount of depreciation expense : In January 2011, Rogers Co. purchased a machine that cost $85,000. The equipment is estimated to have a 5-year life and a salvage value of $15,000. Compute the amount of depreciation expense for 2011 and 2012 using the double declining balance method..

Prepare a contribution format income statement : Whitman Corporation, a merchandising company, reported sales of 7,400 units for May at a selling price of $677 per unit. The cost of goods sold (all variable) was $441 per unit and the variable selling expense was $54 per unit. Prepare a contribution..

How to store and reference data in an array list : How to store and reference data in an array list and How to delete data from the ArrayList

User Account

All Pages