Refer to the information regarding Peggy’s Ribbon World in E6-8.

Required:

1. Suppose Peggy’s would like to generate a profit of \($800\). Determine how many rosettes it must sell to achieve this target profit.

2. If Peggy’s sells 1,100 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

3. Calculate Peggy’s degree of operating leverage if it sells 1,100 rosettes.

4. Using the degree of operating leverage, calculate the change in Peggy’s profit if it raises the sales price of each rosette by \($0.50\).

Data from E6-8

Peggy’s Ribbon World makes award rosettes. Following is information about the company:

Transcribed Image Text:

Variable cost per rosette Sales price per rosette Total fixed costs per month $ 1.10 2.50 889.00