Dana\'s Ribbon World makes award rosettes. Folloing is Information about the com
ID: 2551935 • Letter: D
Question
Dana's Ribbon World makes award rosettes. Folloing is Information about the company: Variable cost per rosette Sales price per rosette Total fixed costs per month $ 3.50 6.00 5000.00 Required: 1. Suppose Dana's would like to generate a protit or $1,200. Determine how many rosettes it must sell to achieve this target profnit. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) t Units 2. If Dana's sells 2.220 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales. (Round your Margin of Safety percentage to two decimal places (i.e. .1234 should be entered as 12.34%). Margin of Safety (Units) Margin of Safety in Dollars Percentage of Sales Rosettes 3. Calculate Dana's degree or operating leverage it it sells 2,220 rosettes. Round your intermediate calculations to 2 decimal places and final answer to 4 decimal places.) ee of Operating LeveraExplanation / Answer
Solution:-
(1) Target units:-
Let "x" be the target unit sold
(6-3.5)*x = 1200+5000
x = 2480 units
(2)
BE point = 5000/2.5 = 2000 units
(3) Degree of operating leverage
= (Sales - VC) / (Sales - VC - FC)
(13320-7770) / (13320-7770-5000) = 10.09
MOS (in units) (2220-2000) = 220 units MOS (in Dollars) 220*6 = 1320 %age of sale 220/2220 = 9.91%Related Questions
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