Units sold total variable costs fixed costs total costs

Assignment Help Financial Management

Reference no: EM131327117

U.S. Steal has the following income statement data:

Units Sold Total Variable Costs Fixed Costs Total Costs Total Revenue Operating Income (Loss)

25,000 $ 75,000 $ 30,000 $ 105,000 $ 175,000 $ 70,000

45,000 135,000 30,000 165,000 315,000 150,000

The top row of the table has the beginning values and the bottom row of the table has the ending values.

a. Compute the degree of operating leverage (DOL) based on the formula below. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) DOL = Percent change in operating income / Percent change in units sold

Degree of operating leverage_________________________

b. Recompute DOL using the formula given below. There may be a slight difference due to rounding. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

DOL = Q(P − VC) / Q(P − VC) − FC

Q represents beginning units sold (all calculations should be done at this level).

P can be found by dividing total revenue by units sold.

VC can be found by dividing total variable costs by units sold.

Degree of operating leverage_________________________

Reference no: EM131327117

Questions Cloud

Discuss about the articles given below : You need to write a basic paragraph identifying the fungal topic of the news article. Next you must explain why it is of interest to you. Lastly, you must demonstrate that there is some scientific literature available on the subject.Fungal disease..

What are the payoffs from the call : Suppose some stock currently selling for $80 will either increase in value over the next year to $100, or decrease in value to $64. The risk free rate over the period is 10% given annual compounding. [Let r denote the continuously compounded rate per..

Develop pro forma statement for a base year : From the above data, develop a pro forma statement for a base year showing net operating income (NOI) for Summer Place.

Labor costs without passing them on in form of higher prices : Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cone. Labor costs will go from $7.91 to $8.51 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb t..

Units sold total variable costs fixed costs total costs : Units Sold Total Variable Costs Fixed Costs Total Costs Total Revenue Operating Income (Loss). Compute the degree of operating leverage (DOL) based on the formula below. (Do not round intermediate calculations. Round your final answer to 2 decimal pl..

Why it is not testable in the context of scientific method : Your neighbor comes over to help out with Buddy and poses the following hypothesis: Buddy won't eat because he feels his owner is in danger. Is this a testable hypothesis? If so, please explain how you would test it. If not please explain why it i..

Estate is good investment in well-diversified portfolio : It is commonly known that real estate is negatively correlated with stocks. Does that automatically mean that real estate is a good investment in a well-diversified portfolio? Explain.

Income statement for tri-county cable services : Prepare a segmented income statement for Tri-County Cable Services, Inc - Data for these segments for the year.

Evaluate the options for solving the problem : Recognize the hindrances to the decision-making process in order to apply problem-solving skills to a variety of situations.

User Account

All Pages