Operating Leverage SungSam Enterprises reports the following data: Determine Sun
ID: 2474163 • Letter: O
Question
Operating Leverage
SungSam Enterprises reports the following data:
Determine SungSam Enterprises's operating leverage.
Sales Mix and Break-Even Analysis
Einhorn Company has fixed costs of $105,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow:
The sales mix for products QQ and ZZ is 40% and 60%, respectively. Determine the break-even point in units of QQ and ZZ.
a. Product QQ units
b. Product ZZ units
Sales Mix and Break-Even Analysis
Wide Open Industries Inc. has fixed costs of $475,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow:
The sales mix for products AA and BB is 60% and 40%, respectively. Determine the break-even point in units of AA and BB. Round your interim computations to nearest cent, if required.
a. Product AA units
b. Product BB units
Target Profit
Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000.
Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000.
Sales $340,000 Variable costs 180,000 Contribution margin $160,000 Fixed costs 80,000 Income from operations $ 80,000Explanation / Answer
Answer:
Operating leverage=Contribution margin/Net operating income
=$160000/80000=2 times
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