Hello Statistics Group: I posted this question tofinance people and no one is an

Question

Hello Statistics Group: I posted this question tofinance people and no one is answering me yet so I thought maybe Icould rely on the people who helped me in statistics. Here itgoes. Thanks in advance. Break-evenpoint and operating leverage Allison Radios manufactures a complete line of radio andcommunication equpment for law enforcement agencies. Theaverage selling price of its finished product is $180 perunit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year. a.) What is the break-even point in units for thecompany? b.) What is the dollar sales volume the firm must achieve inorder to reach the break-even point? c.) What would be the firm's profit or loss at the followingunits of production sold: 12,000 units?, 15,000 units? 20,000units? d.) Find the degree of opertaing leverage for the roductionand sales levels given in part (c.) Please show how you got the answers. Thanks. Break-even point). You are a hard-working analyst in theoffice of financial operations for a manufacturing firm thatproduces a single product. You have developed the followngcost structure information for this company. All of itpertains to an output level of 10 million units. Using thisinformation below, find hte break-even point in units of output forthis firm. Please show how you got your answer. Thanks. Return on operating assets = 25%, operating assetturnover = 5 times, Operating assets = $20 million and degree ofoperating leverage = 4 times. Hello Statistics Group: I posted this question tofinance people and no one is answering me yet so I thought maybe Icould rely on the people who helped me in statistics. Here itgoes. Thanks in advance. Break-evenpoint and operating leverage Allison Radios manufactures a complete line of radio andcommunication equpment for law enforcement agencies. Theaverage selling price of its finished product is $180 perunit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year. a.) What is the break-even point in units for thecompany? b.) What is the dollar sales volume the firm must achieve inorder to reach the break-even point? c.) What would be the firm's profit or loss at the followingunits of production sold: 12,000 units?, 15,000 units? 20,000units? d.) Find the degree of opertaing leverage for the roductionand sales levels given in part (c.) Please show how you got the answers. Thanks. Break-even point). You are a hard-working analyst in theoffice of financial operations for a manufacturing firm thatproduces a single product. You have developed the followngcost structure information for this company. All of itpertains to an output level of 10 million units. Using thisinformation below, find hte break-even point in units of output forthis firm. Please show how you got your answer. Thanks. Return on operating assets = 25%, operating assetturnover = 5 times, Operating assets = $20 million and degree ofoperating leverage = 4 times. Break-evenpoint and operating leverage Allison Radios manufactures a complete line of radio andcommunication equpment for law enforcement agencies. Theaverage selling price of its finished product is $180 perunit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year. a.) What is the break-even point in units for thecompany? b.) What is the dollar sales volume the firm must achieve inorder to reach the break-even point? c.) What would be the firm's profit or loss at the followingunits of production sold: 12,000 units?, 15,000 units? 20,000units? d.) Find the degree of opertaing leverage for the roductionand sales levels given in part (c.) Please show how you got the answers. Thanks. Break-even point). You are a hard-working analyst in theoffice of financial operations for a manufacturing firm thatproduces a single product. You have developed the followngcost structure information for this company. All of itpertains to an output level of 10 million units. Using thisinformation below, find hte break-even point in units of output forthis firm. Please show how you got your answer. Thanks. Return on operating assets = 25%, operating assetturnover = 5 times, Operating assets = $20 million and degree ofoperating leverage = 4 times.

Explanation / Answer

x.0mellspacing="0" cellpadding="0" width="453" border="0" x:str> Selling Price per unit   = $180 per unit Variable Cost per unit = $126 per unit Fixed Costs = $540,000 per year (a) Calculating Break-Even Point in units: Break-Even Point (in units) = Fixed Cost / Contribution per unit Contribution per unit = Sales per unit - Vairable Cost per unit Contribution per unit = $180 - $126 = $54 Break-Even Point (in units) = $540,000 / $54 Break-Even Point (in units) = 10,000 units (b) Calculating Break-Even Sales Volume: Break-Even Sales Volume = Fixed Cost / (P/V Ratio) P/V Ratio = Contribution per unit / Sales per unit P/V Ratio = $54 / $180 = 0.3 (or) 30% Break-Even Sales Volume = $540,000 / 0.3 Break-Even Sales Volume = $1,800,000 ( c) Calculating Profit Amount: Profit = (Sales * Contribution) - Fixed Cost Profit = (12,000 * $54) - $540,000 = $108,000 Profit = (15,000 * $54) - $540,000 = $270,000 Profit = (20,000 * $54) - $540,000 = $540,000 (d) Calculating Degree of Operating Leverage (DOL): DOL = $540,000 / [($126 * 12,000) + $540,000] DOL = $540,000 / $2,052,000 DOL = 0.2631 (or) 26.31% DOL = $540,000 / [($126 * 15,000) + $540,000] DOL = $540,000 / $2,430,000 DOL = 0.2222 (or) 22.22% DOL = $540,000 / [($126 * 20,000) + $540,000] DOL = $540,000 / $3,060,000 DOL = 0.1764 (or) 17.64%

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