Question posted in text below Ramada Company produces one golf cart model. A par

Question

Question posted in text below

Ramada Company produces one golf cart model. A partially complete table of company costs follows:

Required:
1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.)

   

2. Ramada sells its carts for $1,250 each. Prepare a contribution margin income statement for each of the three production levels given in the table.



4. Calculate Ramada’s break-even point in number of units and in sales revenue. (Round your final answers to the nearest whole number.)

   

5. Assume Ramada sold 350 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.
    

6. Calculate the number of carts that Ramada must sell to earn $30,000 profit.  


              
7. Calculate Ramada’s degree of operating leverage if it sells 1,050 carts. (Round your answer to 4 decimal places. (i.e. .12345 should be entered as 12.345%.))

   
   
8. Using the degree of operating leverage, calculate the change in Ramada’s profit if sales are 10 percent less than expected. (Round your answer to 3 decimal places.)

Yes No 4. Calculate Ramada's break-even point in number of units and in sales revenue. (Round your final answers to the nearest whole number.) Break-Even Units Carts Break-Even Sales Revenue 5. Assume Ramada sold 350 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year. O Yes O No 6. Calculate the number of carts that Ramada must sell to earn $30,000 profit. Target Unit Sales Carts

Explanation / Answer

1. Table is as shown below:

2. contribution margin income statement for each of the three production levels given in the table is as prepared below:

3. Break-even point in number of units and in sales revenue is as calculated below:

4. Yes Ramada earned profit last year as the break even point was 320 units so he earned profit on 30 carts.

Number of Golf Carts produced and sold 800 Units 1,000 Units 1,200 Units Total costs Variable costs 400,000 500,000 600,000 Fixed Costs per Year 240,000 240,000 240,000 Total costs 640,000 740,000 840,000 Cost per unit Variable cost per unit 500 500 500 Fixed cost per unit 300 240 200 Total cost per unit 800 740 700

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