Question 5 Not complete Marked out of 1.00 Flag question Computing Operating Leverage Suppose the Coffee...

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Question 5 Not complete Marked out of 1.00 Flag question Computing Operating Leverage Suppose the Coffee Bean has a new shop in a Cambridge village shopping center that sells high-end teas and coffees. Further, suppose it has added smoothie drinks to its product line. Below are the assumed sales and cost data for the company. Sales price per (12 oz.) serving Variable cost per serving Fixed costs per month Coffee Tea Smoothie $1.35 $1.25 0.60 0.45 $1.95 0.75 $8,000 Assume that the company sells each month an average of 6,000 servings of coffee, 3,750 servings of tea, and 2,250 servings of smoothies. REQUIRED a. Calculate Coffee Bean's operating leverage ratio $ Numerator $ Denominator Result = Operating leverage ratio = b. If sales increase by 20%, by how much will before-tax profit be expected to change? $ c. If sales decrease by 20%, by how much will before-tax profit be expected to change? Note: Use a negative sign with your answer to indicate a decrease in profits. Check 202 202 App 202 Question 5 Not complete Marked out of 1.00 Flag question Computing Operating Leverage Suppose the Coffee Bean has a new shop in a Cambridge village shopping center that sells high-end teas and coffees. Further, suppose it has added smoothie drinks to its product line. Below are the assumed sales and cost data for the company. Sales price per (12 oz.) serving Variable cost per serving Fixed costs per month Coffee Tea Smoothie $1.35 $1.25 0.60 0.45 $1.95 0.75 $8,000 Assume that the company sells each month an average of 6,000 servings of coffee, 3,750 servings of tea, and 2,250 servings of smoothies. REQUIRED a. Calculate Coffee Bean's operating leverage ratio $ Numerator $ Denominator Result = Operating leverage ratio = b. If sales increase by 20%, by how much will before-tax profit be expected to change? $ c. If sales decrease by 20%, by how much will before-tax profit be expected to change? Note: Use a negative sign with your answer to indicate a decrease in profits. Check 202 202 App 202