Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of...
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Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,325,000 1,395,000 930,000 744,000 $ 186,000 Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Contribution margin per skateboard 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Selling price Variable expense Amount per skateboard per skateboard 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) Number of skateboards 13 1-d. Compute the degree of operating leverage at the level of sales that you computed Requirement (1c). Degree of operating leverage 2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3.00 per skateboard next year. If this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new break-even point in skateboards? (Do not round intermediate calculations.) Contribution margin % Unit sales to break-even point skateboards 3. Refer to the data in Requirement (2) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $186,000, as in the most recent year? (Do not round intermediate calculations.) Number of skateboards 4. Refer again to the data in Requirement (2) above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labour costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Selling price Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,325,000 1,395,000 930,000 744,000 $ 186,000 Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Contribution margin per skateboard 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Selling price Variable expense Amount per skateboard per skateboard 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) Number of skateboards 13 1-d. Compute the degree of operating leverage at the level of sales that you computed Requirement (1c). Degree of operating leverage 2. Due to an increase in labour rates, the company estimates that variable expenses will increase by $3.00 per skateboard next year. If this change takes place and the selling price per skateboard remains constant, what will be the new CM ratio and the new break-even point in skateboards? (Do not round intermediate calculations.) Contribution margin % Unit sales to break-even point skateboards 3. Refer to the data in Requirement (2) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $186,000, as in the most recent year? (Do not round intermediate calculations.) Number of skateboards 4. Refer again to the data in Requirement (2) above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labour costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Selling price
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Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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