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CVP analysis is used to analyze the effects of changes in selling prices, costs and volume on profits. It is also used to determine target profit, the margin of safety, operating leverage, product mix and choosing among marketing strategies and others.
Question 1: Suppose Byron management has a target operating income of $3,000. Assume the same costs as above and the sell price remains at $24 per unit. How many units does Byron need to sell to meet this goal?
Question 2: What is Byron's margin of safety in sales and in units when Byron sells 730 units?
Question 3: What is the degree of operating leverage when 730 units are sold? If required, round your answer to two decimal places.
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