Lobster Trap Company is considering automating its manufacturing facility. Compautamation follows:BeforeAfterSales revenueLess: Variable costContribueion narginLesa: Tixed costAutomation Automat ian$206,00099.000$107,00019,000S H8,000$206,C0042,000$164, C0057,000Net operating incone$107,000Required:1. Calculate Lobster Trap's break-even sales doliars before and after automation.2. Compute Lobster Trap's degree of operating leverage before and after automatioComplete this question by entering your answers in the tabs below.Required 1Requires zCompute Lobster Trap's degree of operuting leverage before and after automation. (RounDOL Before AutomationDOL Ater Autamation

Formula: Contribution margin = sales - variable cost Deduction of variable cost from sales value…

Answered: Lobster Trap Company is considering…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 5P

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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
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Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Before Automation AfterAutomation Sales revenue $ 206,000 $ 206,000 Less: Variable cost 99,000 42,000 Contribution margin $ 107,000 $ 164,000 Less: Fixed cost 19,000 57,000 Net operating income $ 88,000 $ 107,000 Required: 1. Calculate Lobster Trap’s break-even sales dollars before and after automation. 2. Compute Lobster Trap’s degree of operating leverage before and after automation.
ABC company manufactures a particular computer component. Currently, the cost per unit is as follows: Direct Materials;P50, Direct Labor,P500; Variable Overhead,P250; Fixed Overhead,P400XYZ company has obtained with an offer to sell 10,000 units of the component for P1,100 per unit. If ABC accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should ABC make or buy the component? Select the correct response: Make due to savings of P3,000,000 Buy due to savings of P1,000,000 Buy due to savings of P2,500,000 Make due to savings of P500,000
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