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SeaBass2013 SeaBass2013
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A week ago
Use the information provided below to answer the following questions:

Sales ($50 per unit)$10,000
Cost of goods sold (all variable costs)6,000
Fixed costs2,800

Required:

a.How many units would the company need to sell to earn $4,000 in operating income?
b.How many units would the company need to sell to earn $4,000 in net income
if the tax rate is 20%?
c.By how much would operating income change from part (b) with a 10% increase
in units sold?
Textbook 

Managerial Accounting


Edition: 4th
Author:
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choroni64choroni64
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A week ago
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More solutions for this book are available here
a.$10,000 ÷ $50 = 200 units; ($10,000 - $6,000) ÷ 200 = $20 Unit CM;
($2,800 + $4,000) ÷ $20 = 340
b.$4,000 ÷ (1 - .20) = $5,000 operating income; ($2,800 + $5,000) ÷ $20 = 390
c.($390 × ($50 - $30)) ÷ ($390 × ($50 - $30) - $2,800) = 1.56 degree of
operating leverage;
1.56 × .10 = 15.6%; $5,000 × 0.156 = $780

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