# Question

Ramada Company produces one golf cart model. A partially complete table of company costs follows:

Required:

1. Complete the table.

2. Ramada sells its carts for $1,200 each. Prepare a contribution margin income statement for each of the three production levels given in the table.

3. Based on these three statements (and without any additional calculations), estimate Ramada’s break-even point in units.

4. Calculate Ramada’s break-even point in number of units and in sales revenue.

5. Assume Ramada sold 400 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.

6. Calculate the number of carts that Ramada must sell to earn $65,000 profit.

7. Calculate Ramada’s degree of operating leverage if it sells 850 carts.

8. Using the degree of operating leverage, calculate the change in Ramada’s profit if sales are 10 percent less thanexpected.

Required:

1. Complete the table.

2. Ramada sells its carts for $1,200 each. Prepare a contribution margin income statement for each of the three production levels given in the table.

3. Based on these three statements (and without any additional calculations), estimate Ramada’s break-even point in units.

4. Calculate Ramada’s break-even point in number of units and in sales revenue.

5. Assume Ramada sold 400 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.

6. Calculate the number of carts that Ramada must sell to earn $65,000 profit.

7. Calculate Ramada’s degree of operating leverage if it sells 850 carts.

8. Using the degree of operating leverage, calculate the change in Ramada’s profit if sales are 10 percent less thanexpected.

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