Oxygen Co. has the following forecasted data for 2020 Forecast sales in units 50,000.00 Selling price per unit 80.00 Variable cost per unit 50.00 Fixed Cost: Manufacturing Overhead 600,000.00 Interest Expense 50,000.00 Earnings per share 8.50 1. The break-even point in units is 2.What is the degree of operating leverage at 50,000 units sales level? 3.What is the degree of financial leverage at 50,000 units sales level?

Oxygen Co. has the following forecasted data for 2020 Forecast sales in units 50,000.00 Selling price per unit 80.00 Variable cost per unit 50.00 Fixed Cost: Manufacturing Overhead 600,000.00 Interest Expense 50,000.00 Earnings per share 8.50 1. The break-even point in units is 2.What is the degree of operating leverage at 50,000 units sales level? 3.What is the degree of financial leverage at 50,000 units sales level?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 20MC: Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month...

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Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
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Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing? 0.4 and 10% 2.5 and 10% 2.5 and 25% 5.0 and 50%
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