TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table: Estimated sales in units Unit price Variable cost per unit Total fixed costs. TastyKreme Krispy Kake 20,000 1. Operating income 6.00 3.00 $ 30,000 Required: 1. Compute the operating income and degree of operating leverage (DOL) for each company. (Round "Degree of operating I to 1 decimal place.) Degree of operating leverage 15,000 8.00 3.00 $ 45,000 2. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the p and dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus s TastyKreme Krispy Kake
TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table: Estimated sales in units Unit price Variable cost per unit Total fixed costs. TastyKreme Krispy Kake 20,000 1. Operating income 6.00 3.00 $ 30,000 Required: 1. Compute the operating income and degree of operating leverage (DOL) for each company. (Round "Degree of operating I to 1 decimal place.) Degree of operating leverage 15,000 8.00 3.00 $ 45,000 2. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the p and dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus s TastyKreme Krispy Kake
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter10: Forecasting Financial Statement
Section: Chapter Questions
Problem 12PC
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