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.
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.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 1SEQ: Mario Company is considering discontinuing a product. The costs of the product consist of $20,000...
Related questions
Question
Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows:
Before Automation | After Automation |
|||||
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,