Question

The following budget data apply to Newberry’s Nutrition:


Direct labor workers are paid hourly wages and go home when there is no work. The marketing and administration costs include $50,000 that varies proportionately with production volume. Assume that sales and production volumes are equal.

REQUIRED
A. Compute the number of units that must be sold to achieve a target after-tax income of
$120,000, assuming the tax rate is 40%.
B. Calculate the margin of safety in both revenues and units.
C. Calculate the degree of operatingleverage.


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  • CreatedJanuary 26, 2015
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